When signing up for your car insurance, you will come across the term IDV. For anyone new to this abbreviation, IDV stands for insured declared value. The IDV is an important aspect of your car’s insurance policy and as a car owner, you need a basic overview of IDV in order to make the right decisions on your
Car Insurance In India plan.
So, to help you out, here are five things to know about IDV in car insurance.
1. IDV determines maximum insurance coverage
The IDV is the present value of your vehicle in the market. It is the amount that your Motor Insurance Policy provider will pay you if your vehicle is stolen or has undergone total loss through damage. The damage might either refer to a situation where the car can no longer run or when the vehicle’s total repair costs exceed 75% of the IDV. So, simply put, if the IDV of your vehicle is Rs 4 lakh, then if your car is completely damaged or stolen, your insurance company will pay you Rs 4 lakh.
2. The calculation of IDV
The IDV is calculated on the car manufacturer’s selling price of the vehicle model minus the standard depreciation the car has gone through. That is a basic overview of the calculation and not an exact formula. The IDV does not include insurance and registration costs. Also, if the car owner has fitted any extra accessories, they may have these included in the IDV minus any wear and tear (depreciation)these have gone through.
3. On lowering the IDV
When taking car insurance, some people often lower the IDV in an attempt to lessen their general insurance premiums. While this might temporarily save you some money, you can end up losing big in the long run. If your car is completely damaged or stolen, a low IDV will see you get a lesser payout than what your vehicle is actually worth in the market.
4. On increasing the IDV
In contrast to the previous point, some people opt for a higher IDV to increase their payout in case of a mishap. While this might seem like a good idea, you need to be aware that this might not always work. For instance, even if you have a higher IDV, when you make a claim, the insurance company will make their own calculations based on depreciation and vehicle age at that point in time. So, you might actually receive an amount that is lower than the IDV inspite of having paid very costly premiums to the insurance provider.
5. IDV for cars no longer being manufactured
If your car model is older and no longer being manufactured, the IDV can be arrived at by a mutual discussion and agreement between you and the insurance company.
Finally, do remember to get your vehicle insured as soon as possible. Research well and choose an insurance provider who offers good coverage at affordable premiums. Drive safe.
Published by riteshkumar