Importance of Setting Correct IDV For Your Car
Updated On Oct 16, 2023
Check out this article to understand the importance of Insured Declared Value for your car.
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Purchasing a car is very very expensive. Therefore, you must make sure to invest in car insurance to keep yourself safe from the financial liabilities incurred by any accidents or repairs. While purchasing your car insurance policy, it is important that you make sure to buy an affordable plan. Your car’s IDV (Insured Declared Value) plays a major role in determining the cost of your car insurance premium. Read this article to find out what IDV is and how it is important.
What Is IDV In Car Insurance?
IDV is an abbreviation for Insured Declared Value. It is nothing but the current value of your car in the market. Your car undergoes regular wear and tear from the day it leaves the showroom. This wear and tear reduces the market value of your car and is termed depreciation. To calculate the value of your car, the value of depreciation is subtracted from the car’s selling price.
Insurance companies determine the cost of your car insurance premium as well as settlement based on the market value of your car. If your car has a high Insured Declared Value, you will be paying a higher premium amount as the repair costs for the same will be high too. You will also end up receiving a higher settlement amount if your car’s IDV is high. If your car has a low IDV, you will be paying a lower premium and also receive a lesser settlement amount when you claim your car insurance.
Why Is IDV Important?
The Insured Declared Value of your car is given high importance in the insurance sector. Your car’s IDV is considered both at the time of purchase as well as renewal. It is also considered while settling your insurance claim in case of extensive damage to your car.
At The Time of Purchase Or Renewal of Car Insurance Policy
The IDV of your car will directly impact your car insurance premium when you purchase it and even when you renew it. This is mainly because the depreciation of the auto parts would have reduced the overall market value of your car. Therefore, your car’s IDV would also have dropped. Having a high IDV for your car will mean that you will be paying a higher premium amount. On the contrary, if your car’s IDV is low, you will likely be paying a lesser premium.
While Claiming Car Insurance
Insurance companies majorly consider your car’s Insured Declared Value at the time of claim settlement. In case your car is involved in an accident that has resulted in damaging your car beyond repair, your insurance company will pay the amount that is equal to the Insured Declared Value of your car at the time when the claim has been made. Thus, if your car’s IDV is high, you will be receiving a higher claim amount. Similarly, if your car’s IDV is low, you will receive a comparatively lesser claim amount.
Why Is It Important To Set The Right IDV For Your Car?
Setting the right IDV for your car is imperative to pay the correct premium and also to receive the correct claim amount. If there is a mistake in the Insured Declared Value of your car, you may not receive the complete claim amount that you should be receiving. On the other hand, there is a high possibility that you will be paying an increased claim amount if your IDV is set too high. Settling the correct value will help your insurance company to determine the correct cost of the premium as well as the settlement amount when you claim your car insurance. This is why it is very important to calculate your car’s IDV.
Having car insurance is mandatory according to the Indian Motor Vehicle Act. Thus, ensure that you purchase a car insurance policy that offers you maximum coverage at an affordable premium. Check your car’s IDV when you purchase your car insurance policy and pay the right premium to receive the correct claim amount.
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.