The following things need to be taken into consideration when assessing the IDV of your vehicle –
The market value of the car/bike is calculated by deducting the depreciation rate from the current price. This amount is the maximum compensation that you will receive in case of total damage/loss of your vehicle
Evaluating the correct IDV of the car might cost you lower premiums
However, to reduce the premium amount, do not reduce the IDV of your car. It might cause problems when making a claim later in the future.
Declaring the right IDV amount would mean rightful claim
Do self-evaluation of the IDV and research on the same before agreeing to the IDV value set by your insurer
Additionally, check the premiums charged and see whether the amount is correctly evaluated based on your vehicle’s IDV
Car insurance plans should provide sufficient coverage, and hence the IDV value should be satisfactory. Know that you can negotiate with your insurer to get the desired IDV amount
When it comes to car insurance renewal, ensure that the new premium amount charged is determined based on the IDV.
IDV is one of the most crucial components of a vehicle insurance as it is the amount that you will be entitled to receive if your vehicle is stolen or suffers total damage. Hence, it is essential to get an IDV that is close to the current market value of your car. However, many policyholders avoid declaring the correct IDV fearing an increase in premium. This is because the higher the IDV of the vehicle, the higher will be the motor insurance premium. Most insurers offer to decrease IDV from 5% to 10% based on the customer’s preference.
Nevertheless, it’s important to choose the right IDV of the bike or car as it may hamper your claim process and cause unnecessary losses. The whole point of getting insurance is to avoid losses and failing to declare the right IDV defeats that purpose.
The IDV plays a vital role in the calculation of the own damage component of the motor insurance premium. You may already know that the Own Damage or OD cover, though very important, is an optional cover. OD coverage will only be applicable when you choose a comprehensive motor insurance policy. It offers compensation in case your vehicle is damaged or stolen. Hence, this component of the premium can be up to 2-3 percent of the IDV of your vehicle and will vary according to its age and cubic capacity. Therefore, the higher the IDV, the higher will be your vehicle insurance premium and vice versa.
So, if you haven’t calculated the IDV of your vehicle, it will be nearly impossible to estimate your own damage premium.
When renewing your car or bike insurance, never agree to pay the premium blindly as per the insurance quotes. Always make it a point to check whether the IDV quoted in the policy justifies the premium charged by the insurance provider.
If the value of the IDV is not mentioned in the policy, get in touch with your insurer and get the required details. It’s important to remember that the premium of a comprehensive vehicle insurance policy is impacted by the IDV.
Hence, one has to be careful to not understate or overstate the IDV; this would, in turn, be a hassle at the time of claim settlement.
Did you know? Your IDV keeps falling as your vehicle ages. In insurance terms, the vehicle begins depreciation from the time it is purchased. Hence, IDV keeps falling, and so do the insurance premiums. But if anything were to happen to your vehicle (total damage or theft), the insurer will compensate for the loss incurred based on the IDV declared by you at the time of purchasing.
Now, you may think that declaring a higher IDV will get your more money in compensation and vice versa. However, that is not the case. Here’s what happens to your claim settlement when you declare a lower/higher IDV.
Hence, declaring the correct IDV of your vehicle needs to be in accordance with the vehicle age and model.
IDV comes into the picture only if you have a comprehensive bike or car insurance, which includes Own Damage cover. The premium of the own damage cover is calculated based on the IDV of the vehicle. As the vehicle ages, the own damage premium decreases due to depreciation.
The IDV of the vehicle aged 5yrs & above is based on factors such as:
Basically, the IDV is predetermined for older vehicles based on a mutual arrangement between the insured and the insurer.
Buying car insurance or bike insurance is a long-term investment. Hence, declaring the IDV correctly at the time of buying an insurance is very important. At Finserv MARKETS, we would like to remind all vehicle owners that the IDV should be according to the age and model of their vehicles to avoid any discrepancies during claim settlement. Buying motor insurance with Finserv MARKETS is a simple and quick process.
What’s more, by buying bike insurance or car insurance, you can enjoy exclusive benefits such as cashless claim settlements, quick claim settlement, round-the-clock assistance and much more. To buy or know more about motor insurance visit Finserv MARKETS.