Things You Didn't Know About A Car's IDV
The Insured Declared Value (IDV) of your automobile is the current market value. Let's know about facts about IDV.
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The IDV is the maximum amount that the insurer will pay you in the case of a loss. In other words, the projected current market value of your covered car is IDV. In the event of a total loss of the car, the insurance company determines the amount of auto insurance claim settlement money it would payout based on the IDV. When a loss exceeds 75% of the IDV due to an accident or theft, it is referred to as a constructive complete loss.
Things you didn't know about a car's IDV
What is IDV and how is it Calculated?
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. Additional accessories fitted after the purchase are also considered when determining the IDV of a vehicle. In the case of any non-factory-installed gadgets, such as speakers or music devices, the cost of such items is applied to IDV because the cost of such items is independent of 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 or Higher than the Market Value
When purchasing automobile insurance, some people have reported IDVs that are greater or lower than the market value of the vehicle. This is why many choose a lower IDV to save money on premiums. In the case of an accident, one will have to pay out of pocket for additional expenditures not covered by insurance. Individuals have sometimes claimed a greater IDV than the market value of their car while paying out the insurance. Despite claiming a high IDV when taking out the automobile, the age of the vehicle and the rate of depreciation results in a lesser claim payout throughout the claim settlement procedure.
Take Away
When determining your automobile insurance quote, one of the most essential things that insurance companies consider is your IDV. Check that your car's IDV is in agreement with your car's age and type when getting insurance for the first time or renewing your car insurance policy to avoid any unpleasant surprises during claims.
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