Here’s How IDV Impacts Your Motor Insurance Premiums
While a vehicle used for business purposes must have critical factor is insured declared value or IDV., those used by individuals are needed to get insured with private insurance coverage. That being said, there are various factors based on which the premium of your policy is determined. One such
What is IDV?
IDV in insurer pays this amount in case of total damage or complete loss of your car. Although IDV is the closest to your vehicle’s market value, it is arrived at after deducting depreciation. For instance, if the vehicle is fitted with additional accessories, the concerned IDV came after considering these spares’ valuation.is the approximate current valuation of your vehicle. The
How does IDV impact the premium?
The premium for your policy is based on multiple factors, but the IDV plays a significant role. It is because IDV forms a crucial part of your comprehensive car insurance policy. You need not declare the IDV for third-party policies since no coverage is offered for your car in case of damages. Since IDV is the maximum coverage your insurer provides, it directly impacts the premiums. Knowing how it increases or decreases your motor insurance premiums is imperative. Any adjustment in IDV will raise or lower the bonus too. Thus, you must set the right IDV for your vehicle.
How is depreciation accounted for in calculating IDV?
Depreciation is the reduction in the value of your vehicle over a while. The value of your car begins to decline the moment it leaves the showroom. Let’s look at the rates of depreciation for calculating IDV.
|Age of Vehicle||The depreciation rate for IDV|
|Not more than six months||5%|
|More than six months but not more than one year||15%|
|More than one year but not more than two years||20%|
|More than two years but not more than three years||30%|
|More than three years but not more than four years||40%|
|More than four years but not more than five years||50%|
While the above rates are provided for vehicles up to 5 years of age, the insured declared value for older cars than computed by a mutual agreement.
Is it prudent to lower the IDV to save premiums?
No, lowering the IDV to save some premium is not advisable, as it can be counterproductive in the event of a total loss of your vehicle. While it might initially help you save tips, it will end up causing a financial loss at the time of claim.
Finally, a coverage.can help you estimate the impact of changing the IDV on your insurance premiums. Make the smart choice by selecting an IDV based on the additional fitting and accessories to your vehicle to ensure comprehensive