To be legal in India, a valid third-party car insurance policy must cover each new or used four-wheeler. When you purchase or renew a motor insurance policy, a premium is due to the insurance company. Your four-wheeler insurance premium is determined by several factors, one of which is insured declared value (IDV).
What Is IDV In Car Insurance?
A vehicle’s IDV (Insured Declared Value) is the insured amount at the start of a car insurance policy. In the event of a claim, it represents the maximum payout amount. Simply put, it reflects the car’s current market value. For instance, if your vehicle is stolen or severely damaged beyond repair, the IDV is used by your insurance company to determine the insurance claim value. Therefore, ensuring your car is covered with the correct IDV is vital. Doing your car insurance renewal is essential to avoid any coverage gaps and ensure financial security. Claims are subject to terms and conditions set forth under the motor insurance policy.
Why Does Car Insurance Consider The Insured Declared Value?
The IDV is crucial in four-wheeler insurance for the reasons listed below:
- The insured declared value determines the coverage and, therefore, the premium estimate for car insurance. A higher Insured Declared Value for four-wheeler insurance denotes more excellent coverage and a higher premium. The IDV is still decreasing, and low IDVs indicate low premiums. ##
- When assessing car damage, the insurance company computes the costs and then disburses funds from the policy, considering both the damage incurred and the Insured Declared Value (IDV). In cases of total loss, typically at 75% damage, the insurance covers the entire IDV.
- The insurance company, along with the insured, may at times agree to undervalue the car. The Insured Declared Value for car insurance is subsequently decreased. Claims are subject to terms and conditions set forth under the motor insurance
How Is A Car Insured Declared Value Calculated?
The IDV is calculated by deducting the vehicle’s market value from its depreciation costs. If the car has any add-ons, those items’ depreciation value is also considered.
For Brand-New Cars
The declared market pricing of the manufacturing company will be considered. Depreciation has been subtracted from the ex-showroom price. The Insured Declared Value for car insurance increases to 95% because a brand-new four-wheeler loses 5% of its value in the first six months.
Costs Of Depreciation For Old Cars
For older four-wheelers, the insured declared value is calculated similarly. It considers the same factors as contemporary four-wheelers do. It is based on the depreciation over time and the current market value of the manufacturers.
When you enhance your vehicle with accessories, the insurance company considers them in the Insured Declared Value. The IDV of a car increases by the depreciation and market value of these additions if the car is new or used. For new vehicles, the depreciation of these extras is minimal, while it increases as the vehicle ages.
IDV Is Calculated As Follows: Present market value as stated by the manufacturing company – depreciation costs – accessory costs – depreciation value of the parts
All savings are provided by the insurer as per the IRDAI-approved insurance plan. Standard T&C apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
