Everybody has at least some idea of what motor insurance is and its workings. However, this limited base of knowledge about motor insurance leads people to think that it is a simple tool with one feature. Due to the prominence of insurance everywhere in the world, people know that the function of motor insurance is to make sure that your vehicle gets the necessary repairs after an accident without you having to spend any money. This, in turn, makes them think that a bike insurance policy is only meant to be used when you want to get repairs done. While it is the policy’s primary function, it is not the only situation you would face on the road. The details of an incident have a major impact on your bike insurance claims. Hence, you would need a different kind of coverage for a different kind of incident. Hence, bike insurance offers a wide set of features that can help you in various situations.
The perfect example of people not knowing enough about bike insurance is IDV. Despite being so important to your policy, many fail to pay the right amount of attention to it while buying or renewing a policy.
But before we get into what IDV is, you might be wondering why do you even need to know about IDV? If you already have the coverage for repairing your bike if an accident ever happens, why should you worry about anything else? The simple answer is that IDV is not just a part of your policy but an important factor that has an impact on the rest of your insurance plan. Hence, it requires special focus while purchasing or renewing a policy.
What is IDV?
IDV, an abbreviation for insured declared value, is among the biggest factors that often go unnoticed during a bike insurance policy purchase. In a usual scenario, when you get into an accident you contact your insurance provider. After your claim has been processed, the insurance provider provides you with the necessary coverage to repair your bike. With the repairs completed, the claim is considered to be settled. However, there can be certain situations where you cannot receive coverage for repairs. The most notable insurance is when you can has been totaled.
Due to vandalism, theft, etc., your car might be unable to receive the coverage for repairs. This happens when the damage to your bike is beyond repair or your bike has been stolen beyond recovery. In this situation, you cannot get coverage for repairs. This situation is known as a total loss of vehicle. Being unable to repair your bike leaves you in a tricky financial position.
For this specific situation, insurance policies have IDV. IDV is the maximum amount of money that your insurance provider would spend towards your bike. In the case of a total loss, you would receive this amount as a payout. It is a compensation for the vehicle loss. The exact amount is set at the time the insurance policy is purchased. Hence, it is important to set the right amount while purchasing the policy. You also have a chance to update this amount at the time of renewing a policy.
Should you increase the IDV of your bike insurance policy?
Now you know that you can change the IDV of your policy to fit your needs. Usually, when somebody thinks about changing their IDV, they are looking to increase it. Doing so offers a much greater advantage to a policyholder. This makes the policy even better for you. Since the amount you would be paid in the case of a total loss of vehicle increases, it means you are well-protected from the financial burden of it all.
However, there are two sides to each coin. Hence, something that you do to put yourself at an advantage can also be harmful in certain situations. You need to know exactly how much to increase your IDV by, if at all. Your IDV is directly related to your premium. Hence, if you go for a higher IDV, you would have to pay a larger amount as premium. Coverage for a situation that might rarely occur could be a bad thing to increase your premium over. Hence, you need to look at your unique situation before increasing you IDV.
