When it comes to car insurance in India, the Insured Declared Value (IDV) holds significant importance. IDV represents the maximum amount an insurer will compensate you if your vehicle is stolen or damaged beyond repair. It serves as the basis for determining the premium for your car insurance policy.
Understanding IDV and how it is calculated is crucial to ensure you have adequate coverage. In this article, we will explore what IDV is, how it can be manually calculated, the availability of online IDV calculators, the factors that influence IDV calculations, and the importance of declaring the correct IDV when obtaining car insurance.
What is IDV?
The Insured Declared Value (IDV) is the approximate current market value of your vehicle. It represents the maximum amount an insurance company will pay in case of a total loss, such as theft or irreparable damage. The IDV is calculated based on the manufacturer’s listed selling price of the vehicle, including the cost of accessories (if any), minus the depreciation. It is essential to note that the IDV is not the same as the purchase price or the on-road price of the car.
Manual Calculation of IDV
To manually calculate the IDV, consider the following steps.
- Determine the manufacturer’s listed selling price (inclusive of accessories) of your vehicle
- Determine the age of the vehicle in months
- Use the applicable depreciation percentage based on the age of the vehicle:
- For the first six months, depreciation is minimal (around 5%)
- From the seventh month to the second year, depreciation increases to around 10%
- The percentage continues to rise every year, varying between 15% and 25% based on the vehicle’s age
- Subtract the depreciation amount from the manufacturer’s listed selling price to arrive at the IDV
Online IDV Calculators for Cars
Many insurance providers and third-party aggregators like Bajaj Allianz Car Insurance, SBI General Car Insurance, Bajaj Markets, etc. offer online IDV calculators on their platforms. An online IDV calculator for car insurance can simplify the computation process by providing a quick estimation. Follow these steps. bajajfinservmarkets
- Visit an insurance company’s website or an online insurance aggregator that offers an IDV calculator
- Enter the required details, including the make, model, variant, year of manufacture, and registration date of the vehicle
- The online calculator applies the appropriate depreciation percentage based on the provided information to calculate the IDV
- The calculated IDV will be displayed on the screen, offering an estimated market value for your vehicle
Factors Affecting IDV Calculation
Several factors influence the IDV calculator for cars which are stated below.
- Age of the vehicle: Generally, older vehicles have a higher depreciation rate, resulting in a lower IDV
- Model and make: Luxury or high-end vehicles may have a higher IDV due to their higher market value
- Condition of the vehicle: The overall condition of the car, including wear and tear, maintenance, and mileage, can impact the IDV
- Geographical location: Vehicles in accident-prone areas might have a lower IDV due to higher risks associated with theft or accidents
- Modifications or accessories: Additional modifications or accessories added to the car can increase the IDV to account for their value
Importance of Declaring the Correct IDV
Declaring the correct IDV when obtaining car insurance is crucial for several reasons. You can consider the following reasons in order to understand the importance of declaring the correct IDV of your car.
- Adequate compensation: Underestimating the IDV to reduce the premium can lead to inadequate compensation in case of a total loss or theft
- Premium calculation: Accurate IDV declaration ensures that your premium is calculated correctly, avoiding overpayment or underpayment
- Fair coverage: Declaring the correct IDV ensures that you receive fair compensation for your vehicle in unfortunate events
- Policy renewal: Reassessing the IDV during policy renewal is vital as market value, depreciation, and modifications may change over time
Understanding the Insured Declared Value (IDV) is crucial for car insurance in India, as it determines the maximum compensation you can receive for your vehicle. By calculating the IDV manually or using online calculators, you can make informed decisions about coverage. Factors like age, model, condition, and accessories affect IDV calculations.
Declaring the correct IDV is essential to ensure adequate compensation and fair premiums. By accurately valuing your vehicle, you strike a balance between affordability and comprehensive coverage, safeguarding your prized possession on Indian roads. Take the time to assess and declare the correct IDV during the insurance process, and stay protected with the right coverage for your car.