What Is The Insured Declared Value (IDV) In Bike/Two-wheeler Insurance And How To Calculate It?

by SMCIB on Tuesday, 20 February 2024

What Is The Insured Declared Value (IDV) In Bike/Two-wheeler Insurance And How To Calculate It?

India is a country of two-wheelers. In the busy streets and big roads of India, where buses and trains might not always be reliable, motorcycles are like freedom on wheels. They give you the power to go where you want, when you want, without waiting for anyone else.

Because we care so much about our motorcycles, it's super important to make sure they're protected with the right kind of insurance. And one big part of that is understanding something called Insured Declared Value, or IDV. It might sound fancy, but don't worry, we'll break it down for you in this handy guide made just for savvy Indian riders like yourself.

First, it is important to answer the question of what IDV means in bike insurance.

What is IDV in Bike Insurance?

It's like the maximum amount your insurance company promises to give you if your bike gets stolen or wrecked beyond repair. Here's how it works, IDV is calculated based on how much your bike would sell for in the market right now. They figure it out by looking at the original price of your bike when it was new, and then they adjust it based on how old your bike is. That's the depreciation part.

Now, why is IDV so important? Well, it's not just a number on your insurance papers. It's the backbone of your policy. It decides how much you'll pay for your insurance premium, and most importantly, it makes sure that if something bad happens to your bike, you won't be left in a financial mess.

Let’s take a deeper look at this.

Importance of IDV in Bike Insurance

Basically, the higher your IDV in bike insurance, the more coverage you'll have, but also the more you'll pay for your premium. On the flip side, if you opt for a lower IDV, your premium will be cheaper, but you'll have less coverage.

If your bike gets damaged, your insurance provider will look at the expenses needed to fix it. Then, depending on your IDV they will determine how much to pay you. If your bike is completely destroyed and the damage is around 75% or more, they'll pay you the entire IDV. Having a higher IDV means your bike is seen as more valuable, which also means there's a higher risk for the insurance company. That's why they might charge you more for your premium.

So, when you're getting insurance for your bike, make sure you understand what IDV in bike insurance is and why it matters.

How To Calculate IDV of Bike

Calculating the Insured Declared Value (IDV) for your bike is like figuring out its market value with a twist of depreciation. Here's a simple way to do it:

  • Start with the Market Value: Think of it as the current worth of your bike in the market. This changes over time.
  • Factor in Depreciation: Your bike will not stay brand new forever. So, subtract the depreciation from the ex-showroom price or current market value. Depreciation considers wear and tear over time.
  • Exclude Some Costs: Don't include the registration cost, road tax, and insurance cost in your IDV calculation. We're focusing on the bike itself.
  • Accessories Get Their Own IDV: If you've added accessories later on, calculate their IDV separately. They are usually taken into account separately for your bike insurance.

So, the formula is: IDV = Ex-showroom price or current market value - Depreciation

By doing this math, you get a number that not only helps you decide your bike's insurance premium but also ensures you're covered just right.

Understanding The Rate of Depreciation in Bike

Understanding how depreciation works is key to calculating the Insured Declared Value (IDV) in bike insurance. Depreciation starts ticking the moment you drive your shiny new two-wheeler out of the showroom. It's like how your favourite gadget loses value over time.

Let's break it down with an example of Sara and her friend Alisha. They both own identical Honda Activa models. Sara bought her bike in 2022, while Alisha got hers in 2023. Despite being the same make and model, Sara's bike will likely have more depreciation compared to Alisha’s because it's older.

Now, how do insurers calculate this depreciation? They've got their own formula based on the age of your vehicle. Here's a glimpse:

Age of the bike

Depreciation % for IDV

Up to 6 months.


6 months to 1 Year.


1 year to 2 years.


2 years to 3 years.


3 years to 4 years.


4 years to 5 years.


Beyond 5 years

To be negotiated

              *Depreciation is not taken into account for calculating the IDV of vehicles aged more than 5 years.

So, each year, your bike's IDV drops because of the depreciation given above. And when it's time to make a claim, the age of your bike and its current market value will play a big role in how much you get back. That's why keeping track of depreciation is essential for ensuring you're getting the right coverage.

But what about the IDV in two-wheeler insurance beyond 5 years and above? Let’s understand!

IDV For Two wheeler Aged Five Years And Above

When it comes to bikes that have seen more than five years on the road, the calculation of their Insured Declared Value (IDV) gets a bit trickier.

Up until the five-year mark, IDV is determined by the manufacturer's selling price and the gradual depreciation over the years. This depreciation ranges from 5% for newer bikes to as much as 50% for those in the 4 to 5-year-old bracket.

But once your bike hits the five-year milestone or becomes an outdated model, it's a bit of a negotiation game between you and your insurer. They'll take a good look at your bike's condition and its parts to decide on an IDV that's fair for both parties. Some insurance companies even bring in surveyors to help figure out the right IDV, but this extra step might mean an additional cost for you, the policyholder.

Tips For Selecting The IDV

When picking out the right Insured Declared Value (IDV) in bike insurance, there are some key things to keep in mind that'll make the process easier:

1️⃣Purchase Date: Think of this as your bike's birthday. Knowing when you got it helps figure out how old it is. And as we all know, older bikes lose value over time, so nailing down that purchase date is crucial for getting the IDV just right.

2️⃣Make and Model: Here's where the brand and model of your bike come into play. Fancy brands and models usually mean a higher IDV. It's like the fancier the bike, the more it's worth on paper.

3️⃣Variant: We all know that even within the same bike model, there are different variants. Those variants usually come with different price tags, which means the IDV might swing depending on which one you decide to buy or already have in your possession.

4️⃣Type of Policy: Now, IDV isn't something you need to worry about all the time. It's something you need to look into only when you're buying or renewing a comprehensive bike insurance policy. So, make sure you're giving it the attention in such situations.

5️⃣Fuel Type: Whether your bike runs on good old petrol or it's a sleek electric model can also impact the value of IDV in bike insurance.

Having spoken about the tips, you also need to be aware of the impacts of choosing the wrong IDV in bike insurance.

Consequences of Choosing Wrong IDV

Declaring the Insured Declared Value (IDV) in bike insurance is like setting the stage for a fair payout during claim time. But, there's a lesser known plot in the tale. Sometimes, policyholders play a risky game of choosing the wrong IDV. Why? Well, it's a bit like trying to bend the rules to save some cash on premiums or score extra funds when making a claim. But, it doesn't always end well. Here’s why:

  • Underestimating IDV: If you declare a lower IDV to save on premium payments, you're setting yourself up for trouble. When it's time to make a claim, the compensation amount will be based on the IDV you declared. So, if it's too low, you might end up footing a big chunk of the repair bill out of your own pocket.
  • Overestimating IDV: On the flip side, thinking you can game the system by declaring a higher IDV for a bigger payout is a no-go. Insurance companies aren't easily fooled. They'll thoroughly assess the damage during the claim process, and they won't just blindly hand over a hefty sum because you declared a high IDV. In the end, you'll only get what's fair, regardless of any premium you might have shelled out.

So, whether you're tempted to lowball or shoot for the stars with your IDV, remember that honesty is the best policy. It's about finding that balance where you're paying a reasonable premium for the right amount of coverage. After all, when it comes to insurance, it's better to be safe than sorry.


IDV During Policy Renewal

When it's time to renew your policy, insurers often tweak your Insured Declared Value (IDV) based on the depreciation schedule provided by the IRDAI. But here's the catch, just because they suggest a change doesn't mean you should blindly agree to it.

Take matters into your own hands by comparing the new IDV with the market value of your bike. Is it too low? Too high? If it doesn't match up, don't hesitate to ask the insurer for a revision. After all, you want your IDV to reflect the true worth of your wheels.

Remember, the IDV only affects your own damage premium. The third-party insurance premium depends on your bike's cubic capacity, and the personal accident cover premium is independent of your bike's market value. So, when it comes to IDV, make sure you're getting the most out of the deal.

Summing up!

IDV isn't just a fancy term on your insurance documents; it's an important concept in your policy that needs to be fully understood to make the most of it. It dictates your insurance premium and ensures you're not left in financial distress if something untoward happens to your bike. By comprehending the concept of IDV and selecting the appropriate value based on factors like purchase date, make and model, variant, and fuel type, you can safeguard your bike effectively. Moreover, being aware of the consequences of choosing the wrong IDV empowers you to make informed decisions during policy renewal and claim settlement.

So, whether you're hitting the roads of bustling cities or exploring serene countryside trails, make sure your bike is backed by the right IDV, ensuring peace of mind every mile of the way.


  • What is insured declared value in bike insurance?
    Insured Declared Value, abbreviated as IDV, refers to the maximum amount for which your bike can be insured. This is the amount that you would receive in the event of a total loss of your two-wheeler due to an irrecoverable theft or accident. Essentially, it represents the current market price of your bike.
  • What is a higher IDV in bike insurance?
    A higher IDV leads to a higher premium payment. If a higher IDV is agreed upon between the insurer and the insured, the compensation amount in case of a total loss or theft would also be higher.
  • Is it possible to increase the IDV of my bike?
    While the IDV is typically determined based on a formula provided by the Insurance Regulatory and Development Authority of India (IRDAI), you can adjust it by up to 15% in either direction. However, increasing the IDV will result in a higher premium.
  • Can I change the IDV while renewing my policy?
    While the premium is usually calculated based on the depreciated value of the vehicle at the time of purchase and renewal, you have the flexibility to adjust the IDV. The IDV can be altered during the renewal process of the bike insurance policy.
  • Does IDV matter in bike insurance?
    Yes, IDV plays a crucial role in bike insurance. In the unfortunate event of your bike being stolen or declared irreparable after an accident, your insurance company will reimburse you for the entire amount mentioned in your insurance policy's IDV.


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