What Is IDV in Two-Wheeler Insurance and Why Is It Important?
If you are familiar with vehicle insurance, you must have definitely come across the term IDV. It is generally mentioned at the top of every Two Wheeler Insurance quotation. IDV or Insured Declared Value plays a key role in Two Wheeler Insurance.
An IDV is the maximum amount of money you can claim if your vehicle is damaged, lost or stolen within the policy period. In simpler terms, IDV is the current market value of your vehicle minus the depreciation. The premium you pay for your vehicle insurance is directly proportional to the IDV. Hence, IDV is one of the most important components of a Two Wheeler Insurance policy.
Let’s explore some more on the concept of IDV.
How is IDV calculated?
The insurer derives the IDV (Insured Declared Value) by deducting the depreciation from the manufacturer’s listed selling price. Depreciation is the calculated reduction in the value of an asset over a period of time. Hence, as your two-wheeler gets older, its IDV also decreases. Depreciation is especially important in the calculation of IDV for used vehicles. The IDV for the accessories which are not originally factory fitted calculated separately if insurance is required for them. However, insurance and registration costs are excluded from IDV.
Additionally, the insurer also considers factors such as the location of registration, make and model, cubic capacity etc. while calculating the IDV of your vehicle. These cost against these factors are then adjusted with the standard depreciation rates as per Indian Motor Tariff.
What is the appropriate IDV?
When buying a comprehensive Two Wheeler Insurance policy, you should try to get an IDV that is close to the resale value of your vehicle in the market. Hence it is important to seek out a policy that gives you maximum IDV on your vehicle, even if you have to pay a marginally higher premium. Opting for a lower IDV may save you a few hundred rupees on your renewal premium, however, if you happen to meet with an unfortunate accident and your two-wheeler is destroyed beyond repair, you would have to settle for a significantly lower amount than what your vehicle actually cost you. Which is why having an IDV close to the market price of your vehicle is recommended.
If you are planning to buy or renew your two-wheeler insurance, remember to check the IDV offered for the premium you are paying. The higher the IDV for each rupee of premium, the better is the value of that policy. Therefore, when you are buying Two Wheeler Insurance, choose the policy that offers you the highest IDV for a premium that’s within your budget.
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