Seema, a human resource manager, has brought a new car and would like to get it insured so that she can be financially secured. Her friend Sahil who is an insurance policy agent, asked her to get car insurance with the maximum IDV in insurance. Seema wondered what is IDV in insurance? Her friend gave her a detailed explanation of what is IDV value and what is IDV in insurance.
Insurance Declared Value
Insurance declared value is also known as IDV. Sahil said, “IDV is the maximum claim that the insurer will pay you if your car/vehicle is damaged beyond repair or when the vehicle is stolen. The benefit of investing in this policy is that the insurer will disburse the market value of the vehicle when it is damaged.
The monetary value of the product is provided according to the amount declared by the policyholder or the owner of the product. It is basically the market value of the vehicle that you might receive according to the terms and conditions of the policy.
There are various types of car insurance
plans and you need to be aware of all the terms and conditions by carefully perusing the policy documents.
IDV in car Insurance
The IDV of the car insurance
is the assured amount of money when you have to raise the claim during the policy period against your car insurance. IDV value of the car is the maximum amount that you can get for your car. It is referred to as the amount of your car which you will be receiving in today’s market. The IDV in car insurance is helpful to the insurer where he/she can claim the amounts of the product correctly.
Importance of IDV
The insured declared value helps you to decide the premium of the vehicle. It is very important as it provides you with the amount you will get if your vehicle is severely damaged or stolen. This also provides you with adequate coverage and a premium amount of the insurance claimed.
While renewing your bike or a car insurance policy there are many jargons that will be difficult to understand. Sahil responded that a person or the owner of the vehicle should explore each and everything that is associated with the IDV as it is beneficial for the owner.
He added that there is a procedure required to calculate the IDV. Here, the company adjusts some of the essential points or requirements with the help of standard depreciation rates. Seema was now eager to know about all these factors and how IDV is calculated.
Factors that affect IDV
There are several factors or aspects which affect the insured declared value.
- The registration details of the car or a bike.
- Description of the vehicle.
- The registration of the vehicle from where it was bought or the city of registration.
- Model of your particular vehicle.
- Registration date or the first purchase price.
- Fuel type.
- The actual price of the vehicle in the market currently.
Sahil addressed Seema while answering her previous question now of how is IDV calculated. He said that to calculate an IDV, we need one of the most crucial insurance tools known as the IDV calculator.
It is not only helpful in determining the market value of our car but also determines the right amount of premium which needs to be paid for our car insurance. This further aids the insurer in the fixed or the right amount payable during the claims in two cases. i.e., when the car gets stolen or when it is damaged beyond repair.
The IDV is calculated on the basis of the market price which is often referred to as the maximum retail price of the vehicle. We should be aware of the fact that the insurance company will not consider the on-road expenses or cost of valuation, such as the cost of taxes and registration. The list of manufacturer’s selling prices consists of local taxes or duties.
It is believed that for the vehicle which has exceeded the age of five years, then the value of IDV will be agreed upon by the insurance company and the insured/policyholder. It is also possible that the maximum insured value of the vehicle might be 95% of its ex-showroom’s value. Hence, the value of the car or a bike will depreciate by 5% within six months of purchase.
IDV is one of the most important factors which determines what is the insurance premium
of your two-wheeler bike. This is done through a bike insurance calculator. When you file an insurance claim for your two-wheeler, you should always study the various terms and conditions associated with different insurance companies and then choose a wiser one from it.
It is essential to maintain the constant IDV while comparing the quotes from several insurers. A higher IDV attracts a higher amount of premium and vice-versa.