IDV Calculator for Car
IDV Calculation for Car
Purchasing a car insurance policy is a long term investment. There is an ample number of insurance companies offering new policy as well as policy renewal plans at a competitive market rate. The investors prefer taking comprehensive car insurance policy at an affordable premium rate. An important thing to keep in mind before choosing a policy is IDV (Insured Declared Value) along with premium rates. As an insurance policyholder, it becomes important to know the nitty-grittiest of IDV.
What is IDV In Car Insurance?
IDV (Insured Declared Value) is the maximum sum assured by the insurer that a policyholder is supposed to receive in terms of compensation at the event of total damage or loss occurred to the insured vehicle. It is referred to as the current market value of the insured’s car. In other words, IDV is the amount that a policyholder can claim for reimbursement against the damage caused to the insures vehicle.
When a policyholder opts for a comprehensive car insurance policy, IDV is taken into account. The amount of premium payable by the policyholder is directly proportional to IDV. More the IDV more will be the amount of premium although a premium is usually 2% to 3% of the total value of IDV.
IDV Calculation - The insurance company determines the current value of the insured’s car by taking a few factors into consideration such as brand, model and age of the car. IDV is determined on the basis of selling price fixed by the manufacturer and the percentage of depreciation charged on it. The simple formula to calculate IDV is:
IDV = Manufacturer’s registered price – depreciation
The cost accessories that were not fitted by the manufacturer at the time of delivery will be calculated as an additional. In formula will also include components of the accessories and then the IDV will be calculated as:
Insured Declared Value= (Company’s listed price – Depreciation value) + (Cost of vehicle accessories - Depreciation value of the accessories)
Rate of depreciation based on the age of the vehicle:
Age of Car
Rate of Depreciation Without Zero Depreciation cover
Under 6 months
6 months to 1 year
Above 10 years
The final value of the insured vehicle found after deducting depreciation is the maximum compensation that the policyholder can claim at the time of loss or theft. It is very important to know about the value of your IDV. Never reduce your IDV for paying less premium; otherwise, you will end up getting less claim and incur a loss.
Impact of IDV in Car Insurance Policy
Insured Declared Value plays a very crucial part when it comes to calculating the own damage components of the car insurance premium. Though own damage cover is optional and only be available if the policyholder is opting for a comprehensive car insurance policy. The policyholder may or may not opt for this cover, but the own damage premium will be estimated according to IDV. People who will opt for own damage cover will get compensation in case of damage or theft of the insured vehicle. The premium for own damage cover will be 2% to 3% of IDV of the insured vehicle. Though it may vary based on certain factors such as the age and cubic capacity of the vehicle. Hence, higher will be the IDV, higher will be your car insurance premium.
At the time of renewal of car insurance policy, the premium charged on the policyholder must be justifiable. Therefore if the insurer has not declared the IDV you should immediately contact the insurer and get the necessary details. It is important to note that the premium of comprehensive car insurance policy is has a severe impact on the IDV. The ignorance today might turn problematic at the time of claim settlement.
Therefore, one must not be in a hurry to lower down their IDV. It is true that initially, you might end up saving some money by cutting down on the value of the premium, but at the end, you might lose a big chunk of compensation borne by the insurer at the time of claim settlement. It is always recommended to get your insurance at the full amount of IDV because this is what you are going to get at the time of damage or loss. Make sure to check the policy document after they arrive to make sure the values are the same as discussed earlier.
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