Making understanding of IDV easy for you!

Understanding depreciation rates

Another word that is frequently used when determining the premium amount is depreciation. The vehicle's value declines with time. As a result, when determining your payout amount, depreciation is modified.

The following table explains how depreciation affects Two-Wheeler insurance IDV –

Age five and over IDV for a two-wheeler

The computed rate of depreciation of a two-wheeler is directly inversely correlated to the age of the vehicle; that is, the older the two-wheeler, the lower its value. A two-wheeler's depreciated value is calculated for models that are five years old or older depending on the vehicle's usable condition and the state of its body parts. The final IDV may be agreed upon between the insurance provider and the policyholder in the case of a two-wheeler that is more than five years old or an outmoded model. Some insurance providers use the method of hiring surveyors to calculate the accurate IDV for insurance.

Factors Affecting the Insured Declared Value (IDV)

IDV in a two-wheeler insurance is determined based on the following factors –

1. The age of the Two-Wheeler to be insured
2. Two-Wheeler registration date
3. City of registration
4. Fuel type
5. Make, model and variant
6. Two-Wheeler insurance policy tenure

Significance of IDV in two-wheeler insurance

As discussed before, IDV of a Two-Wheeler means the amount of compensation the policyholder receives in case of an unforeseen event. It is wise to get IDV closest to the Two-Wheeler's market value. This ensures that if an accident happens or the insured vehicle is stolen, the owner is compensated fairly enough and does not have to suffer a major loss. Sometimes, insurers may offer to bring down the IDV by about 5-10%. However, this percentage may be chosen by the customer. Hence, a lower IDV value means a lower rate of premium and vice-versa.

Effects of selecting the wrong IDV

The IDV of your two-wheeler directly affects the cost of your insurance. If you decide to lower the IDV, the following things will occur:

1. As a result, the insurance coverage will be less and in the event that the Two-Wheeler is totaled, the claim amount will also be less.
2. You will be required to cover the additional expense out of your own pocket if the cost of restoring the accidental damage is higher.
3. Because of the reduced claim amount, you will ultimately incur a great loss.

However, if you raise the IDV, you will be responsible for the following:

1. Your Two-Wheeler insurance rate will go up as a result.
2. You might not be able to file a claim for a total loss if you do this.
3. As a result, it is crucial that you state your two-wheeler's accurate IDV. You can start by doing extensive research before purchasing a two-wheeler insurance policy. Visit a few websites that sell used or pre-owned two-wheelers to check the market for those as a starting point. By doing so, you'll have a general notion of what your two-wheeler's IDV should be.

In a nutshell

One of the most important considerations for determining your two-wheeler insurance price is IDV. You can compare multiple Two-Wheeler insurance quotes provided by various insurers on our website, which aids in helping you select the best policy for your two-wheeler. At Jio Insurance Broking Limited our endeavor is to provide you with best in class products at competitive rates and in a hassle free way!