We tend to fear the worst when purchasing insurance, and many of us question, “What if my two-wheeler is fully destroyed, irreparable, or stolen?” This is why IDV (Insured Declared Value) is so important.
What is IDV?
The entire value of the covered vehicle determined by the insurer to reimburse the policyholder in the event of irreparable damage or total loss due to accident or theft. IDV is calculated using the manufacturer’s suggested retail price and then corrected for depreciation. The table below shows how depreciation impacts the IDV of bike insurance.
IDV and Premium
On the IDV, the premium rate is applied. The higher the IDV, the higher the price for two-wheeler insurance. As the two-wheeler ages, the IDV lowers, and the premium decreases as well.
When purchasing a two-wheeler insurance policy, the policyholder should be aware that reduced premium rates are occasionally offered to entice clients, but this also means that the two-wheeler will be covered at a lower IDV, and thus its total worth will not be compensated in the event of a mishap. The policyholder must ensure that the IDV is neither understated nor overstated while purchasing insurance.
Apart from IDV, there are a few other terminology linked to two-wheeler insurance that you should be aware of.
Own Damage Premium: This portion protects your car from any impact damage as well as natural disasters such as earthquakes, floods, storms, fires, and other natural disasters.
Zero Depreciation Coverage: This is an optional protection that may be purchased for an additional price. In most cases, depreciation is taken into account while compensating for a loss, but in the situation of zero depreciation coverage, depreciation is not taken into account. As a result, partial losses are better covered.
No Claim Bonus: The insurance provider rewards conscientious police officers with a discount on the renewal own damage premium for the following year if they have had no claims in the previous year.
Third Party Coverage: This coverage protects the policyholder from any financial or legal liability incurred as a result of the accident.
Personal Accident Coverage: Because general insurance covers any damage to the two-wheeler, personal accident coverage accounts for the policyholder’s death or injury in the event of an accident. This coverage protects the policyholder from unforeseeable events that could result in death or disability.
We, at HDFC ERGO, provide the most cheap, comprehensive, and flexible two-wheeler insurance policies with some of the most remarkable features targeted at giving the policyholder with the greatest comfort and peace of mind. Find your two-wheeler insurance rate calculator on our website. With HDFC ERGO, your two-wheeler ride will be fully safe.
Disclaimer: The given information is provided solely for the purpose of illustration. Before proceeding with the sales, please see the policy wordings and prospectus for further information.
How is IDV calculated for two wheeler?
The formula for calculating your IDV is straightforward: It’s the vehicle’s ex-showroom price/current market worth minus depreciation on its parts. The IDV does not cover the costs of registration, road tax, or insurance.
Is higher IDV better?
Own Damage Coverage, for example, is a useful but optional coverage that compensates you if your car is declared fully lost as a result of an accident or natural disaster. Own Damage (OD) coverage premiums are determined as a percentage of IDV. Based on the vehicle’s age and cubic size, this charge can range from 2% to 3% of the IDV. Just keep in mind that the higher the IDV, the higher the premium, and vice versa.
It will be practically impossible to arrive at the OD premium if you haven’t calculated the IDV for your car.
A few car owners may now believe that declaring a lower IDV than the market value is the best option. That’s because the OD premium on your car is exactly related to the IDV; the smaller the IDV, the lower the premium. A lower IDV may save you money on premiums, but it also means you’ll be rewarded with a reduced claim amount in the event of an accident.
Others, on the other hand, may believe that reporting a larger IDV is a good idea, expecting that the claim amount will increase proportionately, or that if they were to sell their vehicle, it would fetch a greater price than the actual market worth. This isn’t always the case, though. In the best-case scenario, IDV is the maximum amount that the insurance company will pay to compensate you for your loss.
The best bet is to get an IDV that is near to the market value of your car. Lowering the IDV value lowers the premium, but it also means you have less coverage than is required. The IDV of your car reduces as it gets older.
Does IDV matter in bike insurance?
A bike insurance policy’s Insurance Declared Value is a crucial component. IDV is an interesting concept. In simple terms, it is the maximum amount of coverage provided by a vehicle insurance provider to a policyholder at the time of a claim.
How IDV value is calculated?
The maximum Sum Assured set by the insurer in the event of theft or total loss of the vehicle is known as the Insured Declared Value (IDV). IDV stands for the vehicle’s current market value. IDV is the reimbursement that the insurer will offer to the policyholder if the car is totaled.
IDV is the difference between the manufacturer’s stated selling price and depreciation. IDV does not include the costs of registration and insurance. If insurance is required, the IDV of non-factory installed equipment is computed individually at an additional expense.
Should I increase IDV value?
The market price of your automobile is the Insured Declared Value (IDV). The higher your car’s IDV, the higher the premium. Your auto insurance premium is affected by the IDV, which is the market price of your vehicle. The premium will increase if you choose a higher IDV.
Can we increase IDV value of bike?
Yes, you may surely customize the IDV of your plan to meet your needs! The IDV of your bike will be calculated by the insurance carrier depending on its age, depreciation, and condition. You can, however, accept their valuation or increase or decrease the IDV to suit your needs.
What happens if IDV is low?
When the insured declared value (IDV) is reduced, the insurance premium is computed on this basis. A lower IDV means a lower premium, while a greater IDV means a higher premium for the same premium rate.
How much IDV decrease every year?
The IDV calculator is an online application that assists you in determining the IDV of your vehicle.
You must evaluate the car’s current market value, which is calculated by subtracting the car’s initial cost from the amount of depreciation. The IDV of your car is the value you receive.
The IRDAI determines the depreciation rate based on the vehicle’s age. While it is 5% for vehicles less than 6 months old, it is 15% for automobiles less than a year old, and then it is 20%, 30%, 40%, and 50% every year.
No, A vehicle’s IDV is determined by its market value and depreciation. It makes no difference whether the vehicle is personal or business. For each, the IDV is determined in a comparable manner.
The Insured Declared Value of a vehicle is used to determine its insurance value. It’s also known as IDV, and it’s the car’s estimated market worth. To determine a car’s IDV, use the auto insurance premium calculator, an online tool that quickly calculates the cost of car insurance.
Does IDV value decrease every year?
The maximum value for which your car is insured in the event of total loss or theft in a given year is known as the insured declared value (IDV). This value usually declines over time as the car depreciates. This amount is used to compute the insurance premium.
What is NCB value?
Definition: A no-claim bonus (NCB) is a premium reduction granted by insurance providers if a vehicle owner has not made a single claim throughout the policy’s duration.
The no-claim bonus is a monetary award given to the car owner for safe driving. For example, if you sell a 10-year-old hatchback and buy a C-segment car, your no-claim bonus will be transferred to the new car, allowing you to save money on insurance. It can be transferred to another insurance provider with proof in the form of a renewal notification or letter from the previous insurer confirming the NCB eligibility.
This decrease in the premium is typically 20% for the second year, 25% for the third year, 35% for the fourth year, 45 percent for the fifth year, and 50% for the sixth year. The amount of the discount is determined on the number of insurance claims you made that year. The NCB can be carried forward, but only if the policy is renewed within 90 days of the preceding policy’s expiration date.