What is IDV?
Insured Declared Value (IDV) is the amount guaranteed by the insurer on the event of theft or total loss of an automobile. This however is calculated by the current market value of the vehicle and not its purchase cost.
Why purchase a higher IDV?
“Penny wise pound foolish” have you ever heard of this quote before? This means if you try saving small amounts by cutting on the basic necessities, you will eventually lose in the long run. IDV is one place where it is a necessity that some people opt out off.
Statistic shows that India is not a very safe place to drive where traffic rules are violated all the time. This includes stolen vehicles, and to have a lower IDV puts the owner at a higher risk. A lesser premium would result in a much lesser claim, and that is not what you as an owner would want when it’s come to damage or comprehensive cover
Does it make sense to increase your IDV? IDV premiums are usually 2% to 3% of the cost insured value of that particular year.
There is a notion of a higher IDV on a vehicle means a higher resale value. This is not entirely true as the value of the vehicle is decided mutually by the insurer and the insurance company.
How do you establish what your IDV should be?
The age of the car plays a major role on IDV. The depreciation factor lowers IDV claim year by year claims and so does its premium. A new vehicle is usually calculated 5% of depreciation within the first 6 months. The 5% is taken into consideration of the showroom cost, this does not include road taxes, and 10 percent per year from thereafter.
In the event of a car that is more than 5 years old its price is determined by both parties, that is the insurer and the insurance company but factors of age, condition, availability of parts of the vehicles are taken into consideration. This calculation is also considered during the time of renewal, and not necessary does the insurer has to agree with the insurance company of its premium. There is scope for debate on its cost and the insurer has within his Rights to negotiate what he believes the market value of the car is by researching on his own.
If the present insurer does not allow you to raise the IDV of your vehicle and user feels its worth more, than there is always the alternative to change the insurer for a new one. Car Owners must keep in mind not being aware the right IDV of the vehicle will result in not enough compensation.
What happens to additional fitting that was not included during purchase?
The Additional fittings are based on the same calculation as the insurer’s vehicle. One must remember that buying IDV is a long term investments and provides protection to the owner.
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