Why Should You Consider IDV When Buying Bike Insurance? | Bharti AXA

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Why Should You Consider IDV When Buying Bike Insurance?

Why Should You Consider IDV When Buying Bike Insurance?

Although buying a bike insurance policy is necessary, and the process is easy and quick (you can buy bike insurance online in just a few clicks) there are many different terms and jargon that you will come across that can be confusing. But don’t make the mistake of ignoring what you do not understand.

Insured declared value or IDV is one such term that may sound like insurance jargon but it is one of the most essential concepts in buying bike insurance that needs to be well understood. In this article we give break down this key concept of IDV so you realise why you should consider it carefully when buying bike insurance.    

The Importance of IDV in Bike Insurance

Before we move ahead with why you should consider IDV while buying bike insurance, let us begin by explaining the concept of IDV so that you grasp its importance well. Your entire bike insurance policy revolves around IDV. That is how fundamentally important IDV is.

Insured declared value or IDV is typically defined as the maximum sum insured or the maximum amount which you the policyholder will receive from the insurance company as compensation in case your bike is totally damaged, lost or stolen, and you raise a claim. Therefore you need to pay close attention to the IDV amount in your bike insurance policy because it is essentially the total value for which your two-wheeler is insured.   

Know How IDV is Calculated When you Buy Bike Insurance

In simple terms IDV is the current market value of your bike; the ex-showroom price, not the on-road price.

When you buy a new bike insurance policy or at the time of renewing your bike insurance, the insured declared value of your bike will be calculated by adjusting the manufacturer’s market price of your bike with the standard rate of depreciation.

These are the standard rates of depreciation as set by the Indian Motor Tariff Act and corresponding maximum sum insured or the IDV percentage of your bike.

Age of Vehicle

Depreciation Rate


0 to 6 months

5% deducted

95% of ex-showroom price

6 months to 1 year

15% deducted


1 year to 2 years

20% deducted


2 years to 3 years

30% deducted


3 years to 4 years

40% deducted


4 years to 5 years

50% deducted



Depreciation means the loss of value of a vehicle over time. The depreciation clock of your bike will start ticking right from the time it leaves the manufacturer company’s showroom.

The insurance company will take the age of the vehicle i.e. depreciation into account when calculating the bike’s IDV at the time of buying a bike insurance policy. This is the formula used by insurers for calculating the IDV of your bike:

Insured Declared Value or IDV = (Manufacturer’s listing price – Depreciation) + Accessories not included in the listed price – Depreciation)

To minimise the effects of depreciation you can take a zero depreciation add-on cover when buying a comprehensive bike insurance policy. When you make a claim for damages to your bike in an accident, the insurance company will not deduct depreciation for the cost of repair or replacement of parts such as fibre glass components, rubber, nylon / plastic parts, tyres and tubes, batteries and air bags and wooden parts, if you have zero depreciation add-on in your policy.

IDV Directly Affects the Premium you Pay on your Bike Insurance

The IDV you set has a direct impact on the amount of premium you will be paying for your bike insurance policy.

Higher IDV = Higher Premium

If you overestimate the market value of your bike and declare a higher IDV to your insurer, it will push up your policy premium and you will be paying a higher premium amount.

Lower IDV= Lower Premium

The reverse is also true. By declaring a lower IDV you will save on the insurance premium and pay a lower premium but there is a catch here. You will receive a lesser amount as claim compensation because your IDV sum insured is low. So you will be losing out in the long term by setting a lower IDV. The best thing to do to be compensated appropriately at the same time keep your premium under control, is to set the IDV for your vehicle accurately when buying bike insurance.

How is IDV Calculated for Insuring Bikes Older than 5 Years?

If you have a 5 year old bike or older model for which you need to renew the bike insurance policy, the IDV will be decided based on a mutual agreement between you and the insurance company. Instead of depreciation the insurance company will assess the condition of your bike. Three things will be taken into consideration – the manufacturer brand, model and availability of spare parts.