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“What’s Your Car’s IDV?†The insurance world is tricky, isn’t it? Everybody is throwing around terms you don’t understand! IDV in insurance is one of them! Making you frantically look up things to get the meaning of them without the jargon, but it never works! <br><br>https://www.dhflinsurance.com/motor-insurance/
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WhatIsTheIDVForMyCar?WhyIsIt Important For MotorInsurance? “What’s Your Car’s IDV?” The insurance world is tricky, isn’t it? Everybody is throwing around terms you don’t understand! IDV in insurance is one of them! Making you frantically look up things to get the meaning of them without the jargon, but it never works! We understand the problems faced by everyday customers such as you, and therefore we are here to explain a certain jargon used by insurance companies in simplerwords. Ever wondered what IDV in insurance stands for? It’s that thing at the top of every Motor insurancepolicy quotation. What does it even mean? Where does the term come from? Why can’t things be made simpler?! Don’t fret, the terminology of IDV is simple, and we will try to break it down foryou. IDV or Insured Declared Value, is the current market price of your car to your insurance company. It is also one of the most important factors of calculating your car insurancepremium. IDV simply means the maximum amount you canexpect if your car is stolen or completedtotaled. But what does any of that mean? What does the current market price of your car have anything to do with your insurance policy? Well, a lot. You see, IDV in insurance is the maximum amount an insurance company will pay you, if your car is stolen or completely damaged. Therefore, it’s correct to assume that IDV is the only collateral you have in case something major happens to yourcar. How does it work? Who calculates the IDV of your car? Whyisitvaluedandwhatit’svaluedat?Whodecidesall this? It’s quite simple really, the IDV of your car is calculated by the insurance company. They do this by looking at the ex-showroom price of your car inthe
market, and calculating depreciation on it. The depreciation value depends on the age of thecar. But does that mean any insurance company can just calculate IDV of your car however they wish? Well, no. Insurance Companies follow the GR:8 of the Indian Motor Tariff (IMT) which provides schedule of depreciation for arriving at IDV. For a brand new vehicle, IDV is 95% of Ex-showroom price (ESP), it is usually reduced by 10% every year; i.e. for year 2, it is 20% less thanESP. The tariff IDV in Insurance guidelines paint a rough picture of what your car should be valuedat. As the car ages, the IDV percentage becomes lesser, as your car becomes less valuable. After 5 years, however, the Indian Motor Tariff leaves it to you and the insurance company to decide the IDV of yourcar. Post 5 years, the insurance company usually gives customers an estimate of IDV on the basis of their car make and model. After receiving the estimate, the customer usually negotiates with the insurance company and completes the process. Do not just look at IDV as a way to lower the premium. By comparing it to make it lower in competition, people play with IDV putting your car at risk/ loss in case of total theft/ totalloss. If you’re looking to buy a comprehensive car insurance policy, remember that it covers both third-party damage and Own-Damage (OD). Remember, the OD premium, which shows up on the insurance quotation, is calculated on the basis of the IDV too. The OD premium can differ due to IDV decreasing every year. However, if you’re buying a third-party car insurance policy, it’s a little different. Third party insurance, by definition doesn’t cover any damages to the owner’s car. It is only if you have added theft, fire etc. in your insurance policy, then IDV in Insurance becomes acomponent. Remember, to check the IDV amount quoted by your insurance company and see if it justifies the value of your car. Any accessories that you didn’t get retro-fitted by the manufacturer of your car should be mentioned in the quotation too. Always talk to the insurance representative freely if you feel there is an error in thequotation.
Asmentionedbefore,theIDVofthecardependsonthe age of the car. The older the car, higher the depreciation. If you decide to keep your IDV low, it will obviously affect the cost of your annual premium. However, if someone selling the insurance offers to lower your IDV for a cheaper premium, don’t accept it. It is not advisable because in case something major happens, you will have to settle for a lesseramount. Therefore, a lower premium also equals to a lower coveragevalue. It is recommended to at-least set the IDV at the prescribed guidelines by the tariff, or higher. It is very important to remember, that car insurance is an investment over and above your car. With rampant increase in cars and rash- driving incidents, it is extremely important to understand the gravity of the situation. Some people look at short-term cost-saving over long-term benefits, and that is not the recommended when getting your carinsured. It is essential to know how IDV is calculated as it is one of the most important components of your car insurance premium. Now that you know how it works, go ahead share it and make good use of thisinformation!
