After finishing the Sunday lunch, it was time to slowly settle down on the couch simultaneously watching TV. While trying for a brief nap, the door bell rang and I had to answer it lazily. One of our neighbours from the community dropped in with sweets. It was a good time to have sweets after finishing lunch but the reason was unknown. However, it did not take much time for me to know the reason as they happily shared the news about their new bike. Though I saw a brand- new bike with tagged ribbons in the basement, I did not know it was theirs’. I wish everyone in our community buy a bike and get us sweets every Sunday afternoon and it is perfectly OK even if they disturb my sleep. When we ran into the details, the new owner is ecstatic to share about the features and of course about the deals. Since, it is the festive season, they got an insurance policy free along with few additional features and a swipe card which has fetch them a mixer and grinder.
I was more interested about the free insurance policy by the way. After digging more about it, I understood that it is a meager policy with mediocre features. But it was absolutely ok as it was free. I anyway did not want to spoil his mood by revealing about his insurance plan with no specific advantages. However, I just wonder how people get carried away with simple things in an assumption of bigger benefits. So, this article is to educate those who are interested to know about the actual necessities of an insurance policy. Let us get into details. Any policy buyer should first understand the concept of Insurance Declared Value (IDV). Does anyone know how does IDV affect bike insurance renewal? To seek answers to this question, let us first understand what IDV is!
Insurance Declared Value is the maximum amount for which the insurance policy is taken! This amount is provided to the insured in case of a loss or theft of your vehicle when there is an unforeseen accident. To put it in simple terms, IDV can be termed as the current market value of your vehicle. To make it more precise, the premium for any policy is calculated on the basis of IDV. In layman’s language, it is the maximum extent of amount where the insurance company pays you if you file a claim for any damage or loss of your insured vehicle. IDV keeps indicating the monetary value of your vehicle throughout its tenure. It is easy to understand the value of your vehicle with the help of IDV as it changes with passing time. The depreciation factor creates variation in it with the age of the vehicle. Hence, the IDV of a new vehicle differs from a 3 years old vehicle. However, the IDV comes into picture seldom. If the condition of the vehicle is completely damaged, the insured will get the market value of the vehicle as a good thumb rule.
How is IDV affected by bike insurance renewal?
IDV is more of the premium calculated in accordance with the depreciation value of the vehicle at that point of time. But it is the owner who has a choice to suggest an IDV that suits his vehicle’s condition at the time of the renewal of insurance policy. But it has to be kept in mind that the maximum limit that the insured can pick undoubtedly depends on the norms set by the insurance company and they differ from company to company. If the vehicle is above 5 years of age or if it is an out dated model, the value is set depending on multiple norms. In such cases, the insurance premium is fixed on the mutual terms between the insurer and the insured. Any insurer can neither refuse a renewal if the policy is open nor can deny third party coverage. However, you may have some restrictions being the policy holder if your vehicle is above 5 years. If the IDV suggested by the policy holder is lower than the vehicle’s market value, you may get to pay a lower premium. Many of the policy holders restrict themselves from fixing up a high IDV in fear of higher premiums as IDV affect bike insurance renewal. Similarly, it is not correct if you opine that a higher IDV declaration can fetch you a higher claim amount as the insurance companies are smart enough to inspect an accident case under their legal purview leading to paying lower claim amounts. So, one needs a concise approach before declaring the IDV as it should project the right amount as neither the high IDV nor low IDV is going to benefit the policy holder.