All About Insured Declared Value (IDV) in Car Insurance
If the vehicle meets with an accident or is stolen, then the insured can claim settlement from the insurance company, which is known as the Insurance Declared Value. The IDV is based on the selling price of the vehicle after reducing its depreciation amount.
Car insurance helps vehicle owners with financial back up at instances when the vehicle meets with a road accident or gets destroyed or stolen due to natural or manmade reasons. When the car is declared as a total loss or is stolen, the insurance company will pay the compensation to the insured, termed as the Insured Declared Value or the IDV. This value is equal to the current market value of the vehicle and is calculated based on the selling price of the car after reducing its depreciation costs. IDV is purely the value of the vehicle and its accessories and doesn’t cover the cost of registration and insurance.
How IDV is Calculated?
The car insurance company will calculate the IDV of the car based on several parameters. It is generally calculated based on the:
- Registration certificate of the vehicle,
- City of registration,
- Date and type of registration as found on the registration certificate
- The make, model, and cubic capacity of the car and
- Its Ex-showroom cost.
According to the Insurance Regulatory and Development Authority of India, (IRDAI), the maximum IDV of the vehicle cannot be more than 95% of its showroom price, as the percentage of its depreciation increases when the vehicle gets old. If the age of the vehicle is greater than five years, then the depreciation is not considered in the calculations. The IDV is a mutually agreed factor that is agreed upon by the insured and the insurer, depending on the age and condition of the vehicle.
IDV Calculator:
This tool estimates its premium amount, that one should be paying for the car insurance. This online tool takes into account the age of the vehicle and its depreciation value to attain the right IDV of the car. It is one of the most important indicators in car insurance and allows the car owners to determine the amount to be paid during claims settlement.
Advantages of Declaring the Right IDV:
The premium of the insurance (for own damage) is directly proportional to the IDV of the vehicle. To lower the premium amount vehicle owners should not accept lower IDV, as it will affect them at the time of filing a claim. A lower IDV attracts a lower claim amount and this declared value is the maximum amount payable by the insurance company if the car is damaged beyond repair.
What to Keep in Mind While Calculating Insured Declared Value?
The following things to be kept in mind while assessing and calculating the IDV of the car:
- Appropriate declaration of the IDV translates as an appropriate claim for the vehicle
- Compare policies, do appropriate research and check with the manufacturer before agreeing to the IDV set by the insurance provider.
- As the IDV incurs a lot of money, it is a good idea to negotiate with the insurance provider for a higher value.
- The cost of the premium is determined based on the IDV.
- Use the internet to fix the IDV of the vehicle online, as it is a comprehensive and time-saving measure.
Bottom Line:
IDV is the amount that the insurer will receive from the insurance company if the vehicle is stolen or damaged. Thus it is recommended to get the maximum IDV for the vehicle that is close to its market value.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.
