When it comes to car insurance, one term that often comes up is the Insured Declared Value (IDV) of the vehicle. IDV is an important aspect that determines the maximum compensation that an insurance company is liable to provide to the car owner in case of theft or total loss of the vehicle. So, what exactly is IDV and how does it affect your car insurance? Let’s find out.
Understanding IDV
IDV stands for Insured Declared Value. It is the current market value of a vehicle as determined by the insurance company at the time of policy purchase or renewal. In simple terms, it is the maximum amount you can claim in case of total loss or theft of your car. The IDV of a vehicle depends on various factors such as the make, model, age, and condition of the car.
The IDV value of a car is crucial during the claim settlement process. In case of a total loss or theft of your vehicle, the insurance company will compensate you based on the IDV. So, it is important to assess the IDV accurately to ensure you receive adequate compensation.
Factors influencing IDV
Several factors come into play when determining the IDV of a car. These factors include:
1. Age of the car: As the car ages, its value depreciates. Therefore, the IDV of an older car will be lower compared to a new one.
2. Current market value: The market value of a vehicle is an important factor in determining the IDV. It takes into account factors such as supply and demand, market trends, and other external factors.
3. Make and model: The brand and model of the car also affect the IDV. Generally, high-end or luxury vehicles have a higher IDV compared to economy cars.
4. Modifications: If the car has any modifications or enhancements, the insurance company may adjust the IDV accordingly.
5. Geographic location: The location where the car is registered or used can also influence the IDV. For instance, cars registered in areas prone to theft or accidents may have a slightly lower IDV.
Frequently Asked Questions (FAQs)
1. What happens if the IDV declared by the insurance company is too low?
If you feel that the IDV declared by the insurance company is low, you can negotiate with them to increase it. However, a higher IDV will result in a higher insurance premium.
2. Can I change the IDV during the policy term?
No, the IDV is fixed for the duration of the policy term. It can only be adjusted during policy renewal.
3. What is the significance of IDV for car insurance premium calculation?
The IDV of a car is one of the major factors that determine the insurance premium. A higher IDV leads to a higher premium and vice versa.
4. Does the IDV affect the insurance coverage for own damage?
Yes, the IDV value affects the extent of coverage for damages to your own vehicle. Higher IDV provides better coverage.
5. How is IDV calculated?
IDV is calculated using the listed selling price of the car and factoring in the applicable depreciation rate as per the Insurance Regulatory and Development Authority of India (IRDAI) guidelines.
6. Is there any way to increase the IDV of my car?
You can negotiate with the insurance company to increase the IDV by paying a higher premium. However, it might not always be possible to get a significant increase.
7. Can I reduce the IDV of my car to save on the insurance premium?
While it is possible to reduce the IDV to lower the premium, it is not advisable. Doing so may result in inadequate compensation in case of a claim.
8. Can the IDV be lower than the car’s purchase price?
Yes, since the IDV takes into account depreciation, it can be lower than the car’s purchase price, especially for older vehicles.
9. Does the IDV affect third-party liability coverage?
No, the IDV does not affect the third-party liability coverage. It is only applicable for own damage claims.
10. How often should I reassess the IDV of my car?
It is recommended to reassess the IDV of your car every year during the policy renewal process.
11. Can I insure my car for a higher IDV than its market value?
Insuring your car for a higher IDV than its market value is generally not allowed by insurance companies. The IDV should reasonably represent the car’s current market worth.
12. Can I use the IDV to claim for a partial loss or damage to my car?
Yes, you can use the IDV to claim for partial loss or damage to your car, subject to the terms and conditions of your insurance policy.
In conclusion, the Insured Declared Value (IDV) of a car plays a vital role in determining the maximum compensation you can receive from the insurance company in case of total loss or theft of your vehicle. It is important to understand the factors influencing the IDV and ensure that it is accurately assessed to receive adequate coverage and compensation.