While buying bike insurance is easy, understanding the same can come across as a complex process for many. Insured declared value in bike insurance is a term that many bike owners are unaware of. However, if you go through the policy document, you may come across the term along with a sum amount of money mentioned. To put it simply, insured declared value stands for the market value of your bike which goes on depreciating as the years pass by. IDV plays an important role at the time of claim in case of theft or total loss of the vehicle. You can also calculate the IDV of your bike using an IDV calculator. Read on to know all about the IDV calculator in bike insurance.
In simple words, insured declared value is the existing market value of your bike; it is the total amount of money you are eligible to receive at the time of claim in case of bike theft or total loss of the bike. The value changes every year based on the depreciation rates. As the bike gets older, the value of the same depreciates. For instance, if you purchase a bike worth Rs.80,000 and at the time of purchase, the insurer calculates the value to be Rs.80,000. After 2 years, the value of the same bike will depreciate as per the standard depreciation rates.
| Vehicle’s lifetime | Percentage of depreciation |
|---|---|
| Less than six months | 5% |
| Exceeding six months but less than a year | 15% |
| Exceeding one year but less than two years | 20% |
| Exceeding two years but less than three years | 30% |
| Exceeding three years but less than four years | 40% |
| Exceeding four years but less than five years | 50% |
Calculating insured declared is pretty simple; it can be done as per the standard depreciation rates. Calculation can be simply done by taking into account the current market value of the bike and subtracting it with the depreciation rates that are applied on parts of the bike. IDV of accessories if any will be calculated separately.
Given below are a few factors that are considered when calculating the insured declared value of the bike
The insured declared value of the bike is calculated based on the selling price of the manufacturer and the depreciation rate based on the age of the bike. However, over a span of 5 years, the depreciation rate of the bike goes from 5% to 50%. In case of bikes older than 5 years, the insurance company will decide on the depreciation rate based on the policy terms and conditions and the parts of the bike.
Having the right insured declared value for your bike is imperative as your premium is decided based on the same. Moreover, at the time of claim, the insured declared value will decide the claim amount you are eligible to get. IDV is directly proportional to the premium. Higher the IDV, higher the premium and vice versa.
Choosing the right insured declared value for your bike is important as in case of bike theft or total loss the insurance company will refund the entire amount based on the IDV mentioned in the policy.
Insured declared value is important in bike insurance as it determines the value of your bike and also the premium.
The insured declared value determines the right value of your bike as it takes into account its make and model, registration details, age, etc. hence, it is important to state the correct IDV as insurers will cover you on that basis.
The premium for your bike insurance is determined based on the policy type, the city you reside in, cc of your bike, make and model, claims history, and the insured declared value too.
In case of damages or losses, insured declared value is the highest amount you can claim for. Many times, people fail to declare the right IDV to reduce the premium. However, this can prove to be a disadvantage as in case of claim, you will receive a low amount which may not be sufficient for your bike.
Factors such as car registration details, make and model of the car, age of the car, and depreciation rates have a great impact on the calculation of the IDV.
Yes, it is best to use the IDV calculator as it helps you calculate the IDV which directly has an impact on the premium you pay
Yes, at the time of policy purchase, you can choose to increase the IDV of the bike by paying a higher premium.
Opting for a higher IDV is a good option only if you own a luxury bike since the spare parts of such bikes are usually expensive.
