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What is Insured Declared Value in Bike Insurance and why it matters?

Understanding Insured Declared Value in Bike Insurance

March 31, 2022 / 10:06 AM IST

Two-wheelers are a preferred choice of commute for millions of people—they are easy to manoeuvre through dense traffic, save time, and are easy on the pocket.

India is a bike manufacturer’s paradise, with a market for every bike—high-end leisure cruisers, everyday commuter bikes and every bike in between. Whichever bike you may have, it more than just two wheels—it is your freedom to travel or cover distances for work—therefore, insuring this critical part of your life is essential.

Insurance is easily available online but jargon can sometimes be hard to understand. In this blog, you will learn about IDV or Insured Declared Value, the parameter that decides the insurance value for your bike.

What is IDV in Two-Wheeler Insurance?
The Insured Declared Value (IDV) is the current market value of your two-wheeler, the amount agreed by you and the insurance provider as the value of your bike before the start of the policy agreement.

It refers to the maximum amount that the insurance company compensates in case of total damage or theft. It is also one of the factors determining the amount you will pay as the bike insurance premium.

Why is IDV in Two-Wheeler Insurance important?

The IDV is the total value of the insured vehicle to be paid by the insurer to compensate the policyholder in case of irreparable damage or total loss due to accident or theft. Choosing a comprehensive policy with accurate IDV will provide you with maximum financial protection in the worst-case scenario.

Selecting or stating the accurate IDV in bike insurance is important because:

● Your bike’s IDV determines the right value of your bike by factoring in the make and model of the bike, depreciation, etc.

● The premium you pay for your two-wheeler insurance is dependent on your IDV. While a lower IDV can reduce your premium, you may have to bear more costs in case of total damage or theft.

● It is vital to choose the IDV that is truest to the actual value of your bike because if your IDV is too high or too low, it can only do you harm as your claim amount (in case of total damage or theft) depends on it.

Factors Affecting IDV

The IDV decreases with age. As vehicles are depreciating assets, their value decreases with time. Since your IDV reflects the market value of your bike, the following are some of the factors considered while calculating the IDV:

● City you registered your bike in

● Age of your bike

● Ex-showroom price of your bike

● Type of bike insurance policy

● Insurance policy period

When you look for insurance online, the parameters above are directly computed by the insurer. Here is an example of how IDV is calculated based on the age of a two-wheeler:


Age of Bike

(in years)

Approximate Insured Declared Value (IDV)

(% of Ex-showroom price* of bike)

< 6 months95 %
6 months – 1 year85%
1-2 years80%
2-3 years70%
3-4 years60%
4-5 years50%


*The ex-showroom price is the cost at which the bike is manufactured at the facility along with GST. This typically includes the manufacturer’s cost and the dealer’s profit.

The Ideal IDV—Which is Better, High IDV or Low IDV?

The IDV you choose essentially translates to the total claim amount you will receive in case of total damage or theft. So, if you have more than one IDV option, here’s how you can go about making your decision.

High IDV

A higher IDV assures higher compensation in case of total damage or theft but it also means you pay high premiums.

Assuming the claim amount can be high, a few owners declare an IDV much higher than the recommended amount. This is not a good idea because if you choose too high an IDV for an old bike, for instance, you may land up being compensated with a much lower amount due to the two-wheeler’s age and depreciation factored in when finalising the claim. This would turn out to be a loss since you would be paying a higher premium for which you would not get the full compensation as expected. Thus, make sure you choose the right IDV based on the factors mentioned earlier.


Choosing too low an IDV can also lead to financial losses. If you settle for a lower IDV, you will receive a lower amount towards your insurance claim. For instance, if your bike is relatively new, only two years old, and you settle for a lower IDV (which is more suitable for an older bike), you may save on premiums but in case of total damage or theft, the claim amount will be low.
In a nutshell, the most ideal IDV in most cases is one that is closest to the current market price of the bike.

When you buy insurance, you hope that you never have to claim it. However, selecting the right IDV while applying for or renewing your bike insurance will ensure that you have something to fall back on for financial losses or damage to your bike.

Moneycontrol journalists were not involved in the creation of the article.

Tags: #Features
first published: Mar 31, 2022 10:06 am