Table of Contents
When acquiring or renewing car insurance, it’s crucial to understand the concept of Insured Declared Value (IDV). IDV in insurance represents the market value of your vehicle and plays a significant role in determining your insurance premium and potential claim settlements.
What Is IDV In Insurance?
Here you go, answering your question of what is IDV in bike insurance. The Insured Declared Value (IDV) is the maximum amount your insurance company will pay in case of theft or irreparable damage to your vehicle. It serves as the cap for claim settlements and is a key factor in calculating your insurance premium.
Significance Of IDV In Car Insurances
- Maximum Payout: IDV determines the maximum amount your online car insurance policy covers.
- Risk Assessment: Higher IDV implies more risk, influencing the premium.
- Claim Settlement: The cost of repairs and replacement during a claim settlement is based on IDV.
How IDV Is Calculated
Use an IDV calculator or follow these formulas:
- Without Accessories: Manufacturer’s Listed Price – Depreciation Value = IDV
- With Accessories: Manufacturer’s Listed Price – Depreciation Value + Cost of Vehicle Accessories – Depreciation Value of Accessories = IDV
Depreciation Schedule For IDV Calculation
IDV is determined using standard depreciation rates set by the Insurance Regulatory and Development Authority of India (IRDAI) #:
6 months and less: 5%
6 months to 1 year: 15%
1 to 2 years: 20%
2 to 3 years: 30%
3 to 4 years: 40%
4 to 5 years: 50%
For cars older than five years, IDV is based on the vehicle’s condition and survey reports.
Considerations When Determining IDV
- Subtract fuel and maintenance costs from the market price.
- A true IDV assessment can reduce premiums and ensure legitimate claims.
- Verify IDV with the insurance provider and the carmaker before acceptance.
Factors Impacting IDV in insurance
- Car’s Age: IDV decreases with age, influencing the market value.
- Car Type: Different car categories have distinct IDVs based on features and cost.
- City Of Registration: Cities with higher risks may lead to a higher IDV.
- IRDAI Depreciation: Standard rates affect IDV, with higher depreciation for older cars. #
- Accessories: The value of the added accessories is depreciated in the IDV calculation.
Effects Of Lowering Or Raising IDV in insurance
Lowering IDV:
- Benefits: Reduced premiums and potential cost savings. ##
- Drawbacks: Lower sum insured, inadequate compensation in case of theft or damage.
Raising IDV:
- Benefits: Increased sum assured, full coverage for damages, higher claim amounts.
- Drawbacks: Higher premiums and potential loss if no claims are made. *
When To Opt For Low Or High IDV in insurance
- Low IDV: Ideal for old, low-value cars. To limit insurance costs according to financial constraints.
- High IDV: Suitable for high-end or luxurious cars. When specialised knowledge is needed for spare parts.
Conclusion
Understanding IDV in car insurance is crucial for making informed decisions when purchasing or renewing online car insurance. Careful consideration of your vehicle’s specifics, age, and financial situation will help determine the most suitable IDV for your four-wheeler. Regularly reviewing and adjusting IDV ensures that your insurance coverage aligns with your car’s actual value, providing financial security and peace of mind. Claims are subject to terms and conditions set forth under the motor insurance policy. *
*Standard T&C Apply
#Visit the official website of IRDAI for further details.
##All savings are provided by the insurer as per the IRDAI-approved insurance plan.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making any related decisions.
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.
