Facts About Insured Declared Value of Car
Published On Nov 17, 2021
The Insured Declared Value (IDV) of your automobile is the current market value. In the case of a claim, such as a total failure, total constructive loss, or theft of the automobile, this is the real value that the insurance company can refund to the insured.
Table of Contents
- Key Facts About Insured Declared Value (IDV) in Car Insurance
- Take Away
In the event of a loss, the IDV is the maximum amount that the insurance will pay you. In other words, your insured vehicle's estimated current market value is IDV. The insurance company decides on the auto insurance claim settlement amount it would release based on the IDV in the case of a full loss of the vehicle. When a loss of more than 75% of the IDV occurs due to an accident or when the vehicle is stolen, it is referred to as a constructive complete loss. Read this article for more interesting facts about the Insured Declared Value of a car.
Key Facts About Insured Declared Value (IDV) in Car Insurance
The phrase "insured declared value," or IDV, appears often in vehicle insurance policies. IDV is one of the most crucial elements in auto insurance that must be grasped. This information will assist you in gaining a thorough grasp of your vehicle's IDV :
Sum Insured of Your Car Insurance Policy
The Insured Declared Value, or IDV, is the maximum amount insured that you, as the policyholder, will get as compensation from the insurance company if you file a claim. The IDV is calculated by taking into account depreciation based on the car's age and the manufacturer's current value. When you acquire auto insurance, you must fix the IDV for your vehicle. In a nutshell, IDV is the estimated current market worth of your vehicle.
Insured Declared Value Impacts Your Car Insurance Premium
The IDV has a direct impact on the cost of your auto insurance coverage. If you overestimate the worth of your automobile and submit a greater IDV to your insurer, your insurance premium will rise, and you will have to pay a higher premium. It's also true in the other direction. You will save money on insurance premiums and pay a reduced premium if you declare a lower IDV, but there is a catch. As a result, you will be responsible for covering the difference in repair expenses out of your own pocket. Setting the IDV for your vehicle appropriately when purchasing auto insurance is the greatest way to keep your premiums under control.
Depreciation Has an Impact on the IDV Calculation
Depreciation is the loss of a vehicle's value over time. This notion in automobile insurance is especially relevant to people who have recently purchased a new car and are wanting to insure it. The loss of value or depreciation of the automobile as a result of use and regular wear and tear begins the moment you drive it out of the showroom. When determining your car's insured declared value, or IDV, insurance companies will include in the vehicle's depreciation.
Depreciation Rates Used to Calculate IDV are Standardised
When you buy a new vehicle insurance policy or renew an existing one, the IDV is calculated by subtracting the relevant depreciation amount from the current market value of your car. When calculating the IDV of a vehicle, the additional accessories installed after the purchase are also considered as an addition to the car price. And the cost of such goods is applied to IDV in the event of any non-factory-installed gadgets, such as speakers or music devices because the cost of such items is separate from the vehicle's price.
IDV for Older Cars is Agreed upon by Both Parties
When you renew your automobile insurance coverage, pay close attention to the IDV. IDV, as you may be aware, has an impact on the amount of premium you pay each year. You also understand how depreciation affects the IDV calculation for new autos. Assume your automobile is older than five years. What criteria will be used to determine the IDV? Instead of depreciation, the insurance provider will analyse the condition of a 5-year-old automobile or a discontinued car model. Three factors will be considered: the manufacturer's brand, model, and spare part availability. The IDV shall be determined by mutual agreement between the policyholder and the insurer.
IDV is one of the most important factors that insurance companies evaluate when establishing your vehicle insurance rate. To avoid any unpleasant shocks during claims, check that your car's IDV is in accordance with your car's age and type whether you are purchasing insurance for the first time or renewing your car insurance policy.IDV is one of the most important factors that insurance companies evaluate when establishing your vehicle insurance rate. To avoid any unpleasant shocks during claims, check that your car's IDV is in accordance with your car's age and type whether you are purchasing insurance for the first time or renewing your car insurance policy.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.