Hitting the open road on your trusty two-wheeler is a liberating experience in India. Whether you’re navigating bustling city streets or cruising scenic highways, your bike offers freedom, convenience, and a healthy dose of fun. But with that freedom comes responsibility. Owning a two-wheeler necessitates proper insurance to safeguard yourself and your prized possession.

In India, as with most countries, having two-wheeler insurance is mandatory by law. However, the mandated Third-Party (TP) Liability insurance only offers basic coverage. To ensure comprehensive protection for yourself, your bike, and others on the road, consider additional two-wheeler insurance policies.

One crucial element of comprehensive two-wheeler insurance is IDV (Insured Declared Value). This blog post dives deep into the concept of IDV, explaining its role in your insurance plan and why it significantly impacts your coverage and premium.

What is IDV in Two-Wheeler Insurance?

IDV stands for Insured Declared Value. In simpler terms, it represents the maximum sum your insurance company will pay you in case of your two-wheeler’s total loss due to theft or an irreparable accident. Essentially, it’s the current market value of your bike at the time of insurance.

How is IDV Calculated?

IDV is not a fixed value. It’s calculated by considering several factors, including:

  • Manufacturer’s Listed Selling Price (Ex-showroom Price): This is the base price of your two-wheeler as determined by the manufacturer, excluding taxes and registration charges.
  • Model and Variant: Different models and variants within the same brand will have varying IDVs due to features, engine capacity, and overall specifications.
  • Age of the Vehicle: Vehicles depreciate in value over time. The older your bike, the lower its IDV will be. Insurance companies apply standard depreciation rates based on the vehicle’s age.
  • IDV Depreciation Chart: Most insurance companies have established IDV depreciation charts that outline the percentage deduction applied to the ex-showroom price based on the vehicle’s age.
  • Add-on Covers: Certain add-on covers, like zero depreciation, can influence the IDV calculation.

Here’s a simplified formula to understand IDV calculation:

IDV = Ex-showroom Price - (Depreciation Rate * Age of Vehicle) + (Add-on Cover Value (if applicable))

For Example:

Let’s say you purchase a brand new motorcycle with an ex-showroom price of ₹1,00,000. As per the IDV depreciation chart, the first-year depreciation might be 15%. Here’s how the IDV would be calculated:

IDV = ₹1,00,000 – (15% * 1 year) = ₹85,000

The Importance of Choosing the Right IDV

The IDV you choose significantly impacts your two-wheeler insurance plan in two ways:

  • Insurance Premium: A higher IDV translates to a higher sum insured, resulting in a slightly higher insurance premium. Conversely, a lower IDV leads to a lower premium but also reduces the maximum payout you receive in case of a claim.
  • Claim Settlement Amount: In the unfortunate event of your two-wheeler being stolen or damaged beyond repair, the IDV determines the maximum compensation you’ll receive from the insurance company. Choosing an IDV that accurately reflects your bike’s current market value ensures you get a fair payout.
Choosing the Right IDV: Striking a Balance

Here are some pointers to help you choose the right IDV for your two-wheeler insurance:

  • Consider the Current Market Value: Research online marketplaces or consult dealerships to understand the current market value of your bike model and variant based on its age and condition.
  • Don’t Overestimate the Value: While it’s tempting to choose a higher IDV to maximize your payout, remember that it also increases your premium. Be realistic about your bike’s current worth.
  • Don’t Underestimate the Value: Choosing an IDV too low can leave you financially burdened in case of a total loss. You won’t receive enough compensation to replace your stolen or damaged bike.
  • Review Your IDV Regularly: As your bike ages, its market value depreciates. It’s advisable to review your IDV periodically and adjust it accordingly during policy renewals.
Benefits of Choosing the Right IDV

Choosing the right IDV offers several advantages:

  • Optimizes Insurance Cost (Continued): avoiding unnecessary overpayment for inflated coverage.
  • Ensures Fair Claim Settlement: In case of a total loss, you receive a fair compensation amount that reflects your bike’s current market value.
  • Provides Peace of Mind: Knowing you have adequate coverage for your two-wheeler offers peace of mind while you’re on the road.
Understanding Depreciation and Its Impact on IDV

As mentioned earlier, depreciation is a significant factor influencing IDV. Here’s a deeper dive into how depreciation affects your two-wheeler insurance:

  • Depreciation Rates: Insurance companies apply standard depreciation rates to the ex-showroom price based on the vehicle’s age. These rates vary depending on the two-wheeler type (scooter, motorcycle) and engine capacity.
  • Impact on Claim Amount: A higher IDV (due to a newer bike or zero depreciation cover) translates to a higher claim amount in case of a total loss. Conversely, a lower IDV (due to an older bike) results in a lower claim payout.

Here’s a table illustrating the impact of depreciation on IDV:

Age of VehicleDepreciation Rate (Example)Ex-showroom Price (₹1,00,000)IDV
1 Year15%₹1,00,000₹85,000
2 Years20%₹1,00,000₹80,000
3 Years30%₹1,00,000₹70,000
5 Years50%₹1,00,000₹50,000
Zero Depreciation Cover and Its Impact on IDV

Zero depreciation is an add-on cover you can purchase with your two-wheeler insurance policy. It eliminates depreciation deductions from the claim amount in case of a total loss during the first few years of ownership (typically 3-5 years, depending on the policy).

Here’s how zero depreciation cover affects IDV:

  • Increases IDV: Since depreciation is not deducted, the IDV for claim settlement remains closer to the ex-showroom price of your bike, especially in the initial years.
  • Higher Premium: Zero depreciation comes at an additional premium cost. However, for newer bikes, the potential benefit of receiving a higher claim amount can outweigh the increased premium.
Important Considerations When Choosing IDV
  • IDV and Add-on Covers: Certain add-on covers, like engine and gearbox protection, might influence the IDV calculation. These add-on covers typically insure specific parts of your bike for their replacement value, which gets added to the base IDV.
  • IDV and Insured Accessories: If you’ve installed any aftermarket accessories on your bike with declared value, ensure they’re included in the IDV calculation during policy renewal. This ensures you receive compensation for their value as well in case of a total loss.


Understanding IDV is crucial for making informed decisions regarding your two-wheeler insurance. By choosing the right IDV, you can strike a balance between optimizing your insurance cost and ensuring adequate coverage for your prized possession. Remember to consider factors like your bike’s current market value, depreciation rates, and the potential benefits of add-on covers like zero depreciation. By following these guidelines, you can ensure your two-wheeler insurance effectively protects you financially in case of unforeseen circumstances.


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Prem Anand

Experienced content writer specializing in Banking, Financial Services, and Insurance sectors. Proven track record of producing compelling, industry-specific content. Expertise in crafting informative articles, blog posts, and marketing materials.

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