IDV Calculation: How IDV is Calculated in Two Wheeler Insurance
Over time, the value of two-wheelers keeps on reducing due to depreciation. To get the correct amount of claim for its insurance, you should know about its market value. For this, the understanding of Insured Declared Value (IDV) is crucial as it denotes how much compensation you are eligible to receive for your two-wheeler against its repair or replacement expenses. It also means that finding the right IDV while purchasing an insurance policy holds a high significance.
What Is Insured Declared Value (IDV)?
The Insured Declared Value (IDV) is equal to the sum assured amount that the insured person gets in case his or her two-wheeler gets stolen or suffers a total loss. It is the existing market value of the two-wheeler after deducting the depreciation amount and bike registration cost which helps in determining the right claim settlement amount.
How to Calculate Insured Declared Value (IDV) in Bike Insurance?
Insured Declared Value is derived after deducting the cost of depreciation from the selling price of the manufacturers along with the cost of accessories after deducting their depreciation. However, the IDV calculation of the accessories of your two-wheeler which are not company fitted is done separately by paying an additional cost. Here is the formula to simplify the calculation of IDV:
Insured Declared Value = (Company’s listed selling price – depreciation value) + (Cost of bike’s accessories excluded from the listed selling price – depreciation value of accessories).
The depreciation applicable in the calculation is based on the table given below:
Age of the Two-Wheeler
Less than 6 months
More than 6 months but less than 1 year
More than 1 year but less than 2 years
More than 2 years but less than 3 year
More than 3 years but less than 4 year
More than 4 years but less than 5 year
However, if the age of the bike is more than 5 years, its IDV is determined on the basis of its serviceable condition and the state of its body parts. In case of different components made of different materials, the IDV value is adjusted accordingly, and the two-wheeler's final IDV is determined as an overall average. Although, in case of old vehicles, the IDV is also determined by mutual agreement between the insurance provider and the insured person. Even some insurance firms call surveyors to reckon the right IDV, which may result in additional cost that has to be borne by the insured.
Factors Determining the Insured Declared Value (IDV)
Some factors affect the Insured Declared Value (IDV) of two-wheeler vehicles, which are as follow:
- Age of bike
- Fuel type
- RTO location
- Make and Model type
- Registration date of bike
- Policy term of bike insurance
Insured Declared Value (IDV) determines the correct market value of your bike and refers to the maximum claim amount your insurer could pay you off in case of an accident or a mishap. Hence, it is important to understand the calculation of the right IDV with the above mentioned methods. Also, IDV is directly proportional to the premium amount of insurance policy, hence, you should select an IDV for your two-wheeler by comparing quotes from different insurers to get the right policy as per your budgets and requirements.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
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