If you own a car in India, you must have heard of IDV or Insured Declared Value. But do you know what it means and how to calculate the IDV of a car? IDV is the maximum amount your car insurance company will pay you in case of total loss or theft of your car. It is also the basis for determining your car insurance premium. In this article, we will explain how IDV is calculated and why it is vital for you.
How Does An Insurance Company Determine The Value Of Cars In India?
The insurance company determines the value of your car based on the following factors:
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Manufacturer's listed price:
It is the value at which the manufacturer sells the car to the dealer. It includes the cost of the vehicle, taxes, and other charges. The manufacturer's listed price is also known as the ex-showroom price.
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Depreciation value:
This is the reduction in the cost of your car due to wear and tear, ageing, and usage. The depreciation rate varies depending on the age of your vehicle and the type of parts.
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Accessories:
Accessories are the additional features or parts installed in your car after purchasing it from the dealer. These may include a music system, alloy wheels, or a sunroof. The insurance company calculates the value of these accessories separately by adding their cost and deducting their depreciation.
The formula for calculating the IDV is:
IDV = (Manufacturer's listed price - depreciation) + (Cost of accessories - depreciation of accessories)
Conclusion
It is advisable to choose an IDV that reflects the current market value of your car. If you select a lower IDV, you may pay a lower premium, but you will also get a lower compensation in car insurance in case of total loss or theft. If you choose a higher IDV, you may pay a higher premium but also get a higher compensation in case of total loss or theft. You can also use an online IDV calculator to estimate the IDV of your car based on its make, model, variant, age, and accessories.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the relevant industry. It is advised to verify the relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information