The significance of Insured Declared Value (IDV) in car insurance cannot be overstated. Understanding the meaning and significance of IDV offers peace of mind, ensuring your vehicle is safeguarded against unforeseen events. When you purchase or renew your motor insurance policy, a premium is set, influenced by various factors, with IDV being crucial. IDV in car insurance represents the highest amount an insurer will pay in case of theft or severe damage, reflecting your car’s current market value. This blog delves deeper into why IDV matters in car insurance policy and how it’s calculated.
Benefits of IDV in car insurance
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Determining Coverage and Premium
IDV in car insurance plays a pivotal role in establishing the extent of coverage you receive and the corresponding premium that you will pay. It helps strike a balance between comprehensive protection and affordability. A higher IDV results in a more extensive range but comes with a higher premium, while a lower IDV reduces coverage but also lowers the premium cost.
If your car is stolen or suffers severe damage beyond repair, IDV ensures that you receive fair and accurate compensation. Insurance providers pay out an amount equal to the IDV, which reflects your car’s current market value.
When your car sustains damage to the extent that it’s considered a total loss (usually above 75% damage), the insurance provider pays the entire IDV amount. It ensures that you are adequately reimbursed for your loss.
IDV directly correlates with the risk involved for the insurer. A higher IDV indicates a higher market value for your car, which translates to a more considerable risk for the insurance company. This information is crucial for the insurer to determine the appropriate premium and assess potential claims.
IDV allows policyholders to customise their coverage based on their vehicle’s value and budget. You can choose an IDV that aligns with your car’s market worth, ensuring you are neither overinsured nor underinsured.
In some cases, insurance providers and policyholders may mutually agree to undervalue the car’s IDV. It can lead to reduced premiums for the insured while still providing adequate coverage. It offers flexibility in tailoring the insurance policy to specific needs.
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Protection Against Depreciation
IDV accounts for depreciation, compensating you for reducing your car’s value over time. It means that even as your car ages, you can still receive a reasonable payout if it’s severely damaged or stolen.
Knowing that your car is insured with an appropriate IDV provides peace of mind. You can drive confidently, knowing you’re financially protected in unforeseen events.
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.