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Insured Declared Value (IDV) in Two-Wheeler Insurance

Posted by Royal Sundaram on 10 Jul 2019

Two-wheeler insurance is mandatory by law for riding bikes on Indian roads. And your bike insurance premium is directly related to your motorcycle’s Insured Declared Value (IDV). Hence, you need to understand what IDV is and how it affects your insurance premium.

What is Insured Declared Value (IDV) in Motor Insurance?

IDV is the monetary value assigned to your motorcycle when your bike insurance cover starts. Thus, IDV is your insured vehicle’s current market value.

Your insurer considers the IDV as the total ‘Sum Insured’, fixed at the time you buy your policy. Hence, IDV is the highest compensation the insurer is liable to pay in case of theft or total loss (when the cost of repairs is more than 75% of the sum assured) of the vehicle.

In other words, if your vehicle is stolen, or suffers damage beyond repair, you cannot claim an amount more than the IDV.

Also, over the years, as your vehicle ages, IDV depreciates from the initial price. Thus, the sum insured becomes lower every year.

How is IDV calculated?

IDV is based on the motorcycle manufacturer’s listed selling price for the make and model you purchased. The exact sum is calculated after deducting the depreciation amount from it.

IDV = Manufacturer’s listed retail price – Depreciation value

Thus, the age of your vehicle affects its IDV. The monetary value of your bike becomes lower with the passage of years. Hence, depreciation increases over time.

Before adjusting the IDV, insurance companies consider the following factors:

  • ♦ The bike’s registration details
  • ♦ The geographical area where the bike is registered
  • ♦ The first purchase date, i.e., its age
  • ♦ The bike’s ex-showroom price
  • ♦ The bike’s make and model, and manufacturer
  • ♦ The policy period

As per the Insurance Regulatory and Development Authority of India’s regulations, your bike’s maximum IDV can be 95% of its ex-showroom price. This price is the vehicle’s actual cost, including state tax. The registration and insurance costs are excluded from your two-wheeler’s IDV.

How does depreciation apply to your two-wheeler’s IDV?

Depreciation applies from the very first day you take your bike out of the showroom. It is the decline in the value of your bike when it leaves the store, and you start using it. The chart given below depicts the depreciation applicable is as per the Indian Motor Tariff Act:

Two wheeler’s Age Percentage of Depreciation
Not more than 6 months 5%
More than 6 months but less than 1 year 15%
More than 1 year but less than 2 years 20%
More than 2 years but less than 3 years 30%
More than 3 years but less than 4 years 40%
More than 4 years but less than 5 years 50%


For example, let’s assume you buy a bike on 01.01.2020 for ₹50,000, excluding registration cost, road tax, insurance, and accessories. After three years, you purchase a three-year long-term package policy on 01.01.2023.

Your insurer will cover it for following IDVs under the policy term from 01.01.2023 to 31. 12. 2026:


Period of Insurance Depreciation IDV
From To
01.01.2023 31.12.2024 30% 35,000
01.01.2024 31.12.2025 40% 30,000
01.01.2025 31.12.2026 50% 25,000


Mutual agreements between the insurer and the policyholder decide IDV of bikes over five years old. The value depends on the bike’s serviceable condition and the state of its body parts. The same applies to models discontinued by manufacturers. The insurance company will send over a surveyor to check the condition of the two-wheeler and its components, and the IDV is agreed upon based on the final report.

What is the impact of IDV on two-wheeler insurance premium?

The higher your two wheeler’s IDV, the higher will be your premium amount. Hence, as your bike ages and its IDV falls, the insurance premium also decreases.

However, it is advisable not to go for a lower IDV at the beginning, lured by lower premiums. Then in case of any damage or loss, you cannot get a reimbursement matching your vehicle’s actual price. Hence, it is better to buy two-wheeler insurance for an IDV closest to the price you paid for your bike.


Your bike’s IDV decides the compensation you can get from your two-wheeler insurance. Quote your bike’s actual cost to get the maximum possible reimbursement from your policy.

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2 responses to “Insured Declared Value (IDV) in Two-Wheeler Insurance”

  1. Raksha says:

    I wasn’t aware of the terminologies NCB and IDV. Thanks for sharing the same. It was really very informative.

  2. Raksha says:

    I recently bought a two wheeler insurance but wasn’t aware how the IDV is calculated. I have come across this term multiple times Thank you for sharing the same.

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