What is Used Car Valuation?

In simple terms, ‘Used Car Valuation’ is a method used to accurately determine the current market value of your car. The current market value of your car, also known as ‘Insured Declared Value’ or ‘IDV’ in insurance terms, is calculated using a combination of factors such as depreciation, model and make of your car, condition of your car, past history of accidents, etc. Depreciation, which refers to the gradual devaluation of a car due to aging, is one of the most important factors in used car valuation. You can take a look at how depreciation is calculated in the table given below: 

Age of Your Car 

Rate of Depreciation

6 months 

5%

6 months to 1 year 

15%

1 year to 2 years 

20%

2 years to 3 years 

30%

3 years to 4 years 

40%

4 years to 5 years 

50%

What is the Impact of Used Car Valuation on Car Insurance?

A major part of car insurance premiums is determined by using the ‘Insured Declared Value’ or the IDV of a car. The IDV of a car is directly determined through the used car valuation process. By performing the used car valuation process correctly, you can get the correct IDV of your car. Having the right IDV is important in car insurance, as your maximum insurance claim payout will be based on it.  If you manually decide to increase the value of your car’s IDV, you will have to pay higher premiums. On the other hand, if you set a lower IDV, you will not receive the actual market value of the car in your insurance claim. When you set the right IDV based on the used car valuation, you will get the accurate insurance claim amount in the event of an accident.

Factors Affecting Insurance Premiums for Used Cars 

Let’s take a look at the main factors that impact the premiums for used cars: 

  • Geographical Location 

The geographical location where you reside and have registered your car plays an important part in determining premiums. If you live in a metropolitan city like Mumbai or Delhi, your car insurance premiums are likely to be higher compared to people living in Tier 2 or Tier 3 cities. 

  • Car Manufacturer and Model 

Your car’s make and model also affects the insurance premiums. For instance, the cost of insurance premiums for a Mercedes luxury car would be much higher compared to the premiums for a budget Maruti Suzuki car. 

  • Insured Declared Value (IDV)

As mentioned above, the Insured Declared Value or the IDV of your car also plays a major role in determining the insurance premiums. If your car is brand new and in good shape, the IDV of your car will only be high, which will result in higher insurance premiums. However, if your car is old and not very well maintained, the IDV will be lower, which will lead to lower insurance premiums. 

  • No Claim Bonus 

If you have any accumulated No Claim Bonus, you will be eligible for a reduction on your car insurance premium prices at the time of insurance renewal. 

  • Add-on Covers/Riders 

If you have purchased any add-on covers or riders, they will add up to your total insurance premium costs. Hence, it is generally recommended that you only purchase limited add-on covers which are necessary. 

Conclusion

As you’ve read above, used car valuation plays a major role in determining your ideal car insurance premiums. You should thus, make sure that you get a fair and accurate car valuation if you are buying or selling a second-hand car. With this, you can get an estimate of the correct market price of the car and your insurance provider can give you the correct insurance premium rates. If you want to buy a car policy, you can check out the ‘Car Insurance Plans’ available at Bajaj MARKETS and choose one that suits your needs.

Check Out Car Insurance Plans Available at Bajaj MARKETS

 

FAQs Related to Used Car Valuation

  • ✔️ What is used car valuation?

    Used car valuation is a process used to calculate the current market value of any car accurately. The Insured Declared Value (IDV) is also derived using the ‘used car valuation’ process.

  • ✔️How can I check my used car valuation online?

    You can check the used car valuation online using ‘Online Car Valuation Estimator, or ‘Online IDV Calculators’.

  • ✔️Does used car valuation affect car insurance premium price?

    Yes, the IDV of your car is based on the used car valuation. Since IDV affects your car insurance price, used car valuation also affects the insurance price.

  • ✔️ How can I lower my car insurance premium price?

     Here are some tips you can use to lower your car insurance premium prices: 

    • Use the No Claim Bonus. 

    • Install an ARAI-approved anti-theft device and you will get a small discount on your insurance premiums. 

    • Avoid buying unnecessary add-on covers.

  • ✔️ Can I increase my IDV if the used car valuation for my vehicle is too low?

    You might have the choice to change your car’s IDV in insurance, but it will also end up increasing your insurance premiums.