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IDV vs Market Value: Key differences for bike owners
When you buy or renew two wheeler insurance, you will notice two numbers quietly shaping what you pay and what you receive after a major loss: the IDV shown on your policy and your bike’s real-world selling price at that moment. They often look similar for a new bike, but they drift apart as your bike ages, parts wear out, and demand changes. If you mix them up, you can end up overpaying your premium or falling short during a claim.
What is IDV?
IDV or Insured Declared Value is the amount your insurer treats as the two wheeler insurance insured value for total loss or theft claims. In other words, it acts like the policy’s 'maximum payout cap' for those situations (after deductibles/excess and policy terms).
In India, insurers commonly follow an age-based depreciation schedule set out in standard motor policy wordings for fixing IDV. For example, it is 5% up to 6 months, 15% for bikes older than 6 months to 1 year, 20% for two-wheeler which is between 1 and 2 years, 30% for 2–3 years old motorcycle, 40% for 3–4 years, and 50% for 4–5 years old bike. If the bike is older than 5 years, it is typically agreed mutually based on condition.
If your IDV is set too low, your total-loss/theft payout is likely to be lower. If it is set too high, you may pay a higher premium even with a no claim bonus in bike insurance, without getting a realistic benefit.
What is market value?
Market value is the price your bike can realistically fetch in the open market today. However, this value keeps changing based on the demand for your bike model, how many kilometres you have ridden, how you have maintained it over the years, and whether the bike has been in any accidents. If you have made any modifications or added accessories, they can raise or lower the value. Unlike IDV, which remains fixed for the policy term, market value is dynamic and can change monthly.
IDV vs market value: the key differences
Here is how IDV differs from the market value:
Basis | IDV | Market Value |
Meaning | IDV is the fixed value of your vehicle agreed with the insurer at the time of buying or renewing the policy. | Market value is the price your vehicle can realistically get if sold in the open market today. |
Nature | Fixed for the entire policy period. | Keeps changing regularly. |
Who decides it | Decided by the insurer, based on depreciation rules set by regulators. | Decided by real-time demand, supply, and buyer interest. |
Impact of age | Reduces every year due to standard depreciation slabs. | Falls or rises depending on vehicle condition and demand. |
Effect of modifications | Does not change with kilometres driven during the policy year. | Strongly affected by kilometres driven and wear and tear. |
Role in insurance | Usually ignored or only partly considered. | Can increase or decrease value based on usefulness and quality. |
Claim payout | The insurer pays up to the IDV in case of total loss or theft. | Not considered for claim payments. |
Flexibility | Can be negotiated slightly at policy purchase. | Fully market-driven and unpredictable. |
How to set an IDV?
To choose the ideal IDV without overpaying the two wheeler insurance premium, consider the following:
● Check realistic resale and market value for your model, age, and condition. You can check local listings to get an idea.
● Compare that with the insurer’s offered IDV based on the standard depreciation slabs.
● Mention an IDV that is close to a realistic selling price, not much above it.
Rule of thumb: If the IDV is far below your bike’s plausible resale value, you are likely under-insured for theft/total loss.
Conclusion
Your policy’s IDV mainly drives what you pay and the ceiling for total loss and theft settlements, while market value guides what your bike could fetch if you sell it. Keep both in mind at renewal: choose an IDV that is realistic, not optimistic, so you don’t overpay today or regret it later.