The necessity of having a four-wheeler insurance policy has increased due to the recent surge in traffic accidents. If you don’t have one, you might have to deal with financial hardship.
As a result, it’s crucial to understand the criteria used to determine your car insurance prices. Your car’s Insured Declared Value (IDV) is a key factor in determining the cost of your car insurance. You receive the equivalent of your car’s sum covered, or the IDV of your car insurance policy, if it is stolen or completely damaged. *
To learn more about IDV in car insurance, continue reading:
The term “insured declared value” refers to the amount fixed that is insured for the car at the start of each insurance period (IDV). The manufacturer’s suggested retail price is used to determine this amount. According to the insurance company’s timetable, it is depreciation adjusted. *
Depreciation is the gradual decrease in asset value brought on by use-related wear and tear. Every year, the percentage of depreciation rises and is inversely related to the age of your car. Based on an agreement between you and your insurer, this value is fixed for a period of five years and may be carried forward.
If your car is stolen or completely damaged, you will be compensated according to the IDV of your car. You are entitled to coverage for the replacement or repair of the damaged auto parts if the accident only results in a partial loss. However, depreciation is taken into account while determining the compensation for some parts.
The IDV of a car is calculated using the formula shown below:
IDV is calculated as follows, disregarding insurance and registration fees: (Listed selling price – depreciation) + (Accessories not included in the listed selling price – depreciation).
IDV’s function is based on the type of car insurance you purchase. Depending on which of the two possible types of car insurance you choose, the IDV differs. *
- Under third-party automobile insurance, you are protected against monetary obligations that result from harm, loss or even passing away caused to a third party’s person or property. However, this plan will not provide coverage for any harm done to your car. The cost of the third-party car insurance premium is set by the IRDAI, India’s insurance regulator. Depending on the type and model of your car, it varies from one vehicle to another. IDV won’t be taken into account under third-party insurance policies. #
- In contrast, a comprehensive four-wheeler insurance plan will pay for both your car’s damages and third-party liability. Additionally, coverage is offered for any losses incurred as a result of natural or man-made disasters, such as earthquakes, floods, etc. The IDV and other similar parameters are used to compute the premium for a comprehensive car insurance policy. Because the rate of depreciation increases with age, the value of the vehicle will decline over time, and the IDV will also drop. *
You can choose the Nil Depreciation Cover, also known as the Zero Depreciation cover, from among the several add-on covers offered to cut down on depreciation deductions. You will be shielded from the expense of depreciation that you must pay during claims with this coverage. Use the car insurance premium calculator to quickly and easily obtain quotes in order to lower your premium. You can get in touch with your insurer by visiting their website if you have any further questions about car insurance. *
In conclusion, it is critical to comprehend how IDV affects the premium cost of your auto insurance policy while purchasing or renewing it.
* Standard T&C Apply
# Visit the official website of IRDAI for further details.
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.