From the moment you drive the two wheeler out of the showroom, depreciation is calculated on the vehicle. It is mandatory under the law to own an insurance under the Motor Vehicle Act 1988. Based on the depreciation percentage, the value of the bike is calculated by the insurer with whom you own an insurance. This value is known as the Insured Declared Value. IDV is commonly known as the market price of the vehicle. Declaring correct value of the bike is essential to determine the right premium amount.
As the premium is subjected to inflation rates, the bike premium amount can vary each year. So one way you can avoid this risk to buy a long-term policy wherein you do not have to renew the policy annually. Insured Declared Value is the sum assured that is fixed by the insurer which will be paid to the insured on the account of theft or total loss of the bike. IDV is calculated based on current market price, and not the on the purchase value. The IDV is calculated as follows;
IDV = (Manufacturer’s listing price – Depreciation) + (Accessories and extra fittings if any – depreciation)
|Percentage of Depreciation||Age of the vehicle|
|5%||Between 0 to 6 months|
|15%||Between 6 months to 1 year|
|20%||Between 1 to 2 years|
|30%||Between 2 to 3 years|
|40%||Between 3 to 4 years|
|50%||Between 4 to 5 years|
As per recent IRDA norms, the premium rates has been standardised with effect from April 1st, 2017.
|Premiums Payable||Engine Capacity|
|Rs.569||Up to 75 cc|
|Rs.1,114||350 cc and above|