Lesser Known Facts About IDV Of a Car
Your insured vehicle's estimated current market value is IDV. Read along to know some facts about IDV of a car.
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In the event of a loss, the IDV is the maximum amount that the insurance will pay you. In other words, your insured vehicle's estimated current market value is IDV. The insurance company decides on the auto insurance claim settlement amount it would release based on the IDV in the case of a full loss of the vehicle. When a loss exceeds 75% of the IDV due to an accident or theft, it is referred to as a constructive complete loss.
Facts About a Car's IDV That Aren't Well-Know
What is the formula for calculating IDV?
The IDV is calculated using the vehicle's "current selling price," model, and year of manufacture. The lower the IDV, the older the engine. When the insurer uses the IDV calculation to compute the insurance for the car, the "current selling price" of the vehicle is used instead of the money paid when the vehicle was purchased. For example, if a car cost INR 10 lakh in 2014 but now costs INR 8.5 lakh, the IDV will be determined based on the current sale price of INR 8.5 lakh. When calculating the IDV of a vehicle, the additional accessories installed after the purchase are also considered as an addition to the car price. And the cost of such goods is applied to IDV in the event of any non-factory-installed gadgets, such as speakers or music devices because the cost of such items is separate from the vehicle's price. These goods have been adjusted for depreciation since they may have suffered some wear and tear over time.
[Ex-showroom price+Sales Tax+Accessories not included in the quoted selling price–depreciation] = IDV –Discounted depreciation+Registration fees+Insurance fees.
Calculation of IDV for a Period of More Than 5 Years
For automobiles over 5 years old or that have become obsolete, the IDV is based on the condition of the car and its age. A contractual agreement is reached between the insurer and the insurance policyholder when it comes to establishing the IDV of the vehicle insurance plan. The age of the vehicle, its condition, and the number of kilometers driven are just a few of the elements that go into determining the car insurance IDV. It's crucial to understand how the IDV depreciates as the vehicle ages. It is not wise to purchase expensive insurance coverage for a vehicle that is more than 5 years old.
Declaring an IDV that is Lower/Higher than the Market Value
When purchasing automobile insurance, people have reported IDVs that are greater or lower than the market value of the vehicle. People choose a lower IDV because they want to pay lesser rates. In the case of an accident, one will have to pay out of pocket for any expenditures not covered by the insurance claim. Individuals have also reported a greater IDV than the market worth of their vehicle while paying out the insurance. Despite claiming a high IDV when taking out the automobile, the age of the vehicle and the depreciation rate results in a lesser claim payout throughout the claim settlement procedure.
Take Away
IDV is one of the most important factors that insurance companies evaluate when establishing your vehicle insurance rate. To avoid any unpleasant shocks during claims, check that your car's IDV is in accordance with your car's age and type whether you are purchasing insurance for the first time or renewing your car insurance policy.
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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.
