The full form of IDV is Insured Declared Value. It is the maximum amount that an insurance company will pay out in case of a total loss or theft of an insured vehicle.
The IDV in insurance is calculated as - the current market value of the vehicle minus depreciation based on its age and condition.
What is IDV in car insurance?
IDV is the highest amount the insurance provider will give you in case your vehicle is stolen or damaged beyond repair. As such, IDV is an important aspect in terms of motor insurance. The IDV also determines the premium you need to pay while buying an insurance policy for your vehicle.
IDV in car insurance
IDV calculator helps you determine the approximate IDV of your car based on its make and model, age, condition, and current market value. The formula to calculate the vehicle’s IDV in motor insurance may slightly differ for different insurance companies.
How to calculate IDV for car insurance?
You can calculate your vehicle’s IDV using the IDV calculator. IDV is calculated based on the manufacturer's listed price, depreciation value, and cost of vehicle accessories, if any.
Use the following formulas to calculate the IDV for a new car equipped with additional accessories:
IDV = (Company’s listed price – the depreciation value) + (cost of vehicle accessories - the depreciation value of these parts)
Use the below formula to calculate the IDV if the car does not have any extra accessories:
IDV = Manufacturer’s registered price – the depreciation value
The depreciation value depends on the age and condition of the car. The insurance company follows a standard depreciation schedule based on the age of the vehicle. The applicable depreciation value gets subtracted from the manufacturer's registered price to arrive at the IDV.
Suppose the manufacturer's registered price of a car is Rs. 10 lakh and it is two years old. Assume that the depreciation value is 20%, i.e., Rs. 2 lakh. In this case, the IDV of the car will be Rs. 8 lakh.
IDV in car insurance is an important factor in determining the premium for your car insurance policy as well. A higher IDV will result in a higher premium, while a lower IDV will mean a lower premium. Therefore, use the IDV calculator and choose an appropriate IDV based on the age and condition of your car. This will ensure that you get adequate coverage in case of a total loss or theft.
Things to remember when calculating the IDV
When calculating the IDV, you must keep in mind the following points.
- Avoid showing a lower IDV to get a lower car insurance premium. This will reduce the coverage amount.
- Similarly, avoid showing a higher IDV. It will result in a higher premium.
- Use the IDV calculator and show accurate IDV to get adequate coverage and benefit the most.
What is the importance of IDV in car insurance?
The Insured Declared Value (IDV) is a crucial factor in car insurance policies as it determines the sum insured by the insurer in case of theft or total loss of your vehicle. Here are some of the key reasons why IDV is significant:
- IDV calculator: The IDV calculator helps estimate the current market value of the insured vehicle, considering factors like depreciation.
- Basis for premium: IDV directly influences the premium amount, with higher IDV resulting in higher premiums and vice versa.
- Financial protection: Opting for the correct IDV ensures adequate financial protection against unforeseen events. Settling on a low IDV may decrease the premium but puts you at the risk of inadequate coverage.
- Claim settlement: IDV plays a crucial role in claim settlement, ensuring fair compensation for policyholders.