What is IDV in Bike Insurance? Meaning, Calculation & Impact on Premium

IDV (Insured Declared Value) is the maximum amount your insurer will pay if your bike is stolen or totalled. It’s basically your bike’s current market value minus depreciation.

Let’s explore this concept in Aman’s case. He had a minor accident with his 5-year-old bike and thought, “Insurance sambhal lega!” But when the claim amount was far less than expected. Now, why did it happen?

That was because of IDV in bike insurance, that is, Insured Declared Value. Your claim depends not on the bike’s original price, but on its current market value after depreciation. Let’s know more about it.
In this blog, we’ll break down what IDV is, how it’s calculated, and why it matters.

What is IDV in Bike Insurance?

Till now, we have covered the basics of IDV, and we know what it means. Once your bike is lost or stolen, your insurer will pay you a certain amount; however, that amount depends on your bike’s current market value. It drops as the bike gets older. 

As per the depreciation norms issued by IRDAI, a 3‑year‑old two‑wheeler retains only 60% of its ex‑showroom price. This means that IDV falls by 40% in three years of use 

Choosing the right IDV is important. If it is too low, you may not get enough compensation. On the contrary, if it is too high, you might overpay on your premium.

For example, Ravi owns a 2-year-old Bajaj Pulsar 150 bought for ₹1,20,000. He’s renewing his insurance. His insurer calculates IDV by applying depreciation and adding ₹5,000 worth of accessories. Ravi wants to know his final IDV and its impact, so he did the following calculations.

Bike Details:
 

• Bike Model: Bajaj Pulsar 150
   
• Ex-showroom Price: ₹1,20,000
   
• Bike Age: 2 years
   
• Accessories Added: ₹5,000 worth (e.g., seat cover, custom exhaust)

1. Apply Depreciation on Bike Value

As per the IRDAI depreciation table, for a 1–2-year-old bike, depreciation is 20%. 

So,

• Depreciation amount
  = 20% of ₹1,20,000
  = ₹24,000
• Value after depreciation
  = ₹1,20,000 – ₹24,000
  = ₹96,000

2. Apply Depreciation on Accessories

Accessories also lose value over time.
 

• Depreciation on accessories = 20% of ₹5,000
  = ₹1,000
• Value after depreciation
  = ₹5,000 – ₹1,000
  = ₹4,000

3. Final IDV

Final IDV = Depreciated Bike Value + Depreciated Accessories Value

    = ₹96,000 + ₹4,000
    = ₹1,00,000

Let’s summarise the above data and calculations in a table for a quick and better understanding.
 

So, Ravi’s bike has an IDV of ₹1,00,000. This is the maximum claim amount he’ll get if the bike is stolen or totally damaged. It shows the bike’s current market value after accounting for age and depreciation.

IDV Calculation: Know What Your Bike Is Worth 

Calculating your bike’s Insured Declared Value (IDV) is like finding its “current price tag” after a few years of use. It’s not just about the original price, but also how much value the bike (and its accessories) has lost due to age.

IDV Formula:

IDV = (Ex-showroom Price – Depreciation) + (Accessory Price – Depreciation on Accessories) 

This formula helps insurers decide how much compensation you'll receive in case your bike is stolen or completely damaged.

• Ex-showroom price: Cost of the bike when it was new (excluding registration and taxes)
   
• Depreciation: Reduction in value based on the bike’s age
   
• Accessory value: Add-ons like fancy headlights or premium seat covers, if declared
   
• Accessory depreciation: These also lose value, just like the bike

Here is the standard depreciation schedule (as per IRDAII guidelines):
 

Let’s understand it further with an example

For example, Anita bought a Hero Splendour Plus for ₹80,000 three years ago. She's renewing her insurance. Her bike has ₹3,000 worth of accessories (seat cover, footrest). She wants to know how her IDV is calculated at renewal time.

So, here is the stepwise calculation:

Basic Bike Info:
 

• Ex-showroom Price = ₹80,000
   
• Bike Age = 3 years
   
• Depreciation (as per IRDAI) = 30%
   
• Accessory Value = ₹3,000

In this case, accessories are not declared, and that is why their depreciation value is not added.

IDV Formula:

IDV = (Bike Price – Depreciation) + (Accessories – Accessory Depreciation)

Apply Depreciation:
 

• Bike Depreciation = 30% of ₹80,000 = ₹24,000
   
• Value after Bike Depreciation = ₹80,000 – ₹24,000 = ₹56,000
   
• Accessory Depreciation = ₹0
   
• Value after Accessory Depreciation = ₹0

Final IDV = ₹56,000 + ₹0 = ₹56,000
 

Let’s have a quick brief about the data we just calculated and see what that means in the table given below.
 

Because the bike is 3 years old, the IRDAI rules apply 30% depreciation, reducing IDV from ₹80,000 to ₹56,000.

Anita did not declare her ₹3,000 worth of accessories, so she loses ₹2,100 in potential claim value (after depreciation). Had she declared them, her IDV would have been:

• Accessory depreciation = 30% of ₹3,000 = ₹900
• Net accessory value = ₹3,000 – ₹900 = ₹2,100
• Improved IDV = ₹56,000 + ₹2,100 = ₹58,100

Factors Affecting IDV

IDV is not an ‘anvayi’ thing; several things decide your bike’s declared value. From how old the bike is, to what city it rides in, and even that fancy seat cover you added, everything counts.

Let’s see what affects your bike’s IDV year after year.

A. Age & Depreciation

As your bike ages, its IDV drops according to IRDAI’s depreciation schedule. After 1 year, it's down by 20%; after 4–5 years, by 50%. It makes older bikes eligible for much lower coverage amounts.

B. Model & Accessories

Premium and newer bike models retain value better, leading to higher IDV. Additionally, if you add and declare accessories, like custom seats or lights, their depreciated cost is included in the final IDV.

C. Location & Market Conditions

The city where the bike is registered affects its market value. Bikes in high-demand or metro areas tend to have higher IDV. It is often priced a little above similar models in smaller towns.

How Does IDV Impact Your Premium?

Your chosen IDV directly affects your bike insurance premium. Set it too high, and you’ll burn money yearly. Set it too low, and your claim payout will disappoint you when it matters most.

Here’s how different IDVs shape your insurance cost and protection.

A. Higher IDV = Higher Premium

IDV and premium are directly correlated. Insurers charge more when IDV is high because they risk paying out more in a total loss. For instance, a ₹90,000 IDV might cost ₹9,000/year (at 10%), whereas lowering the IDV to ₹80,000 reduces it to ₹8,000.

Special Attention please: These figures are simplified estimates. Actual premiums also depend on third-party cover, rider type, bike age, insurer policies, and location.

B. Lower IDV = Lower Premium but Smaller Claim

Setting a low IDV saves money on premiums. However, in the event of total loss, the insurer will pay only the lower IDV. This leaves you with a significant shortfall if market replacements are costlier.

Conclusion

IDV directly affects both your premium and the amount you can claim during a loss or total damage. A higher IDV gives better coverage but comes with a slightly higher premium. A lower IDV is not a safe option either. It reduces your premium but limits your claim.

Choosing the right IDV is all about balance. Remember, your aim is affordable premiums without compromising on protection.

Frequently Asked Questions

Can I manually choose a higher or lower IDV than the insurer suggests?
Yes, insurers allow a limited range (typically ±15%) to adjust IDV at policy purchase/renewal. 

What happens to IDV if I transfer the bike to a different city?
IDV may change slightly depending on regional market rates, registration location, and the insurer’s pricing index for the new RTO.

How does IDV work during mid-term policy cancellation or claim?
If you cancel or claim mid-policy, IDV is adjusted on a pro-rata basis for the remaining term. 

Does IDV impact the third-party premium?
No. Third-party premium is fixed by IRDAI based on engine capacity and is independent of IDV. Only the own-damage premium is affected by IDV.

How does zero-depreciation cover affect IDV-based claims?
Zero-dep cover doesn’t change IDV but ensures no depreciation is deducted from parts replaced during repairs. In total loss cases, the payout is still capped by IDV.

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