You buy a new bike, and you love everything about it. You use it to commute to work, for going out with your friends, and sometimes dates, and even for that occasional long road trip with your biker gang. The bike becomes an integral part of your life and your daily routine. While it caters to so many of your needs, it is equally important that you also treat your bike right and take good care of it. While part of that is ensured by going for regular maintenance of your vehicle, the rest is taken care of by opting for a good insurance policy and keeping it up to date. However, the unfortunate thing is that over 60 per cent of vehicles in our country are uninsured with a large majority of these being two-wheelers, according to a report by the General Insurance Council of India (GIC).
Bike insurance is important and comes in handy if your two-wheeler is involved in an accident. The insurance in such a case would cover the cost of repair and can also cover other liabilities arising out of the situation. Moreover, a bike insurance policy could also protect you from financial losses in case of theft or damage due to natural calamities like floods and fires, as well as man-made disasters like riots and vandalism. As per official statistics, over 5 lakh accidents get reported in India every year with over 1.5 lakh deaths. Moreover, cases of vehicle thefts are also rampant in the country with around 2.5 lakh vehicles stolen every year, as per the latest data from National Crime Records Bureau. Out of these, less than 25 per cent are ever recovered. So it is crucial that you protect your beloved two-wheeler by opting for an adequate comprehensive insurance cover.
Importance of Adequate Insurance and role of Insured Declared Value
If there is anything worse than riding an uninsured bike, it is riding an under-insured one. Why is it worse, you ask. Because you did all the work, paid the premium and bought a policy to cover your two-wheeler, and yet when you unfortunately meet an accident, the policy doesn’t cover the costs completely. This is where comes the importance of Insured Declared Value (IDV), which signifies the maximum sum assured that you can claim on complete loss of the vehicle due to a major accident, or theft.
You should carefully calculate the IDV of your bike while purchasing the policy and avoid the preventable mistake of ignoring it and feeling cheated while filing the claim.
Factors that affect IDV
The IDV of your bike is calculated based on several factors. These include:
Age of the two-wheeler: The age of your bike is among the most important factors that guide the determination of the IDV of your vehicle. As a general rule, the older your vehicle gets, the lower the IDV becomes.
Make and model of the bike: The maintenance and repair costs of vehicles vary from brand to brand. While replacement parts of some brands and models are cheaper and easily available, some other premium brands and models may incur huge costs if a part needs to be replaced. Hence, taking into account the brand of the motor vehicle will help determine its damage repair costs, and in turn, the IDV. For instance, the IDV for a superbike will be higher in comparison to the IDV of bikes that are more common.
Rate of depreciation: The IDV of the vehicle also depends on the depreciation in value of the vehicle. The depreciation rate has been standardized as mentioned in the table below, which is determined by the Insurance Regulatory and Development Authority of India, the following details may differ while buying insurance, please confirm the same with respective insurance company while making decision:
| Age of the two-wheeler | Depreciation % |
| Up to 6 Months | 5% |
| 6 Months to 1 Year | 15% |
| 1 - 2 Years | 20% |
| 2 - 3 Years | 30% |
| 3 - 4 Years | 40% |
| 5 Years | 50% |
Area of vehicle registration: The place where your bike is registered also affects the IDV. In a nutshell, the IDV of a bike registered in metropolitan cities would be different compared to the ones registered in tier-II and tier-III towns, and remote locations in the country.
No claim bonus: NCB is a reward offered for not claiming your bike insurance policy during its tenure. Each claim-free year increases the NCB and it begins from 20% going all the way up to 50%. If you have accumulated any no claim bonus over the previous years then make sure to utilize it during the two wheeler insurance renewal process for concessions.
Why you should set correct IDV for your bike insurance policy
While the IDV is calculated basis the parameters mentioned above, it does not mean that it is a fixed amount set by the insurer and that the vehicle-owner has no control over it. In fact, as per Insurance Regulatory and Development Authority of India (IRDAI) guidelines, insurers can give the option to the vehicle owners to declare higher or lower IDV, provided that the variation is within 10 percent of the actual figure. Moreover, when the bike is over five years old, the IDV is arrived at basis the mutual agreement between the insurer and the bike-owner.
Hence, it is possible to reduce the annual premium by setting a lower IDV. However, while this can save you a little bit of money, it could end up being a big mistake for which you may have to pay at the worst possible time - that is while making a claim.
For instance, if your bike’s IDV is fixed at Rs 1 lakh while buying insurance, the insurer will pay you a maximum of Rs 1 lakh, in case of loss or serious damage. However, if you declare the IDV to be Rs 50 thousand just to save a little on the premium, that is the maximum claim you would be able to file even if your bike is completely damaged or stolen. Thus, fixing the right IDV is crucial and you must go with a value that is closest to the true market value of your bike.
Choose the right service-provider
With so many options available today in the marker, it is easy to be overwhelmed. However, you should look at simple, easy to understand products, and go for a trusted partner like Bajaj Allianz General Insurance. Not only it offers hassle-free claim settlement, it provides support round-the-clock for claims and on the spot assistance. Also, thanks to its Motor On the Spot feature, Bajaj Allianz settles most of the claims within 20 minutes.
If you are confused about determining the right IDV for your vehicle, you can use the two wheeler insurance premium calculator available at the website of Bajaj Allianz General Insurance to determine the appropriate value for your bike, and to estimate the premium you need to pay to buy an insurance policy. The tool helps you easily calculate the IDV based on the age of the motor vehicle and helps you understand the amount you would receive as compensation after total damage or theft. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.
