Car insurance is a very important tool of financial aid that every car owner must have. It has also been made mandatory by the government of India. To purchase the best car insurance plan that fulfils your requirements, you need to know all the considerations and terminologies. Knowing the IDV of your vehicle is one of them. Most insurance providers like Bajaj Allianz car insurance provide the IDV value for your car. You can also estimate the IDV value of your car yourself by using a proper IDV calculator. Here is all the information about it!
What is IDV in car insurance?
Insurance companies like Bajaj Allianz car insurance provide the maximum sum insured which is Insured Declared Value (IDV) when the insured vehicle is stolen or lost to complete. That stipulated total is the maximum amount that your insurance can be availed of. The IDV is essentially the current market value of the vehicle.
When a vehicle suffers total loss, the insurer provides compensation to the policyholder based on IDV. The IDV is calculated by subtracting the manufacturer’s listed selling price from the depreciation factor. Registration and insurance costs are excluded from the IDV. If accessories are not factory installed, IDV is calculated separately at extra cost. The insurance provider takes into a lot of considerations to calculate your IDV. It also positively influences your car insurance premium.
How your IDV is calculated for car insurance?
An IDV calculator is regarded as one of the most significant calculators in the field of motor insurance since it assists car owners in calculating the amount, they will get in the event that the insured vehicle is in total damage or theft. IDV is calculated based on the manufacturer’s designated selling price, from which the depreciation on the parts of the vehicle is reduced. Usually, your insurance provider calculated the IDV estimate for you. But, with the advancement of technology and the introduction of 5G, you can easily calculate your IDV estimate using a proficient IDV calculator.
The following is a description of the formula to determine the real Insured Declared Value (IDV):
The aforementioned formula determines the IDV for a brand-new car with additional accessories that were installed after the car was purchased. If there are no such accessories in the car, the IDV calculation is simpler. Using the online IDV calculator, you can easily know the insured declared value of your car. The following formula is also included:
Factors that help to determine the IDV of a car
A lot of attributes come together to estimate the IDV range of your car. The IDV calculators consider the following factors when calculating your car’s IDV. Take a look at these:
- Age of the car: One of the most important criteria in determining the IDV of your car is the age of the car. Your car’s IDV will drop as its age increases.
- Make and model of the car: The make and model of the car determines how expensive the car is and how much it would cost to repair. For instance, the IDV of a BMW X7 would be more than the IDV of a Hyundai I20 due to its higher cost and maintenance.
- Standard depreciation: Your car’s IDV is impacted by the depreciation. Based on the percentage specified in the depreciation schedule, your car will be depreciated to its market value.
- City of car registration: The city where your car was registered also influences your car insurance IDV. For example, a car registered in New Delhi will have a higher IDV than one registered in a small town in Uttar Pradesh.
How IDV does affect car insurance premiums?
Car insurance premiums are directly proportional to the IDV of your car. This means the higher the value of your car, the higher the premium you will have to pay. Similarly, as your car’s IDV decreases as it grows older, so will your premium amount. In spite of that, it is not recommended to lower your IDV in order to reduce your premium amount because it will result in a loss.
In case of total damage or theft claims, you will receive a smaller compensation amount. The whole idea is to get the IDV closest to the market value of your car without paying a lot of premiums. Insurance providers such as Bajaj Allianz car insurance offer a high IDV for your car at a lower premium. To be more insightful, make sure to estimate your IDV by using an IDV calculator prior to opting for a proficient car insurance plan.