In order to be adequately protected against such misfortunes, you need a comprehensive vehicle insurance plan that provides adequate coverage. This is where Insured Declared Value or IDV comes into the picture.
Insured Declared Value (IDV)
Simply put, IDV is the current market value of your vehicle. In a vehicle insurance policy, IDV refers to the highest sum assured payable by the insurer. It is the claim amount you are likely to receive in case of a total loss of the vehicle or an instance of theft. Not knowing the correct IDV of the vehicle might result in the owner of a vehicle receiving an inadequate compensation.
Calculating Insured Declared Value
In order to arrive at the IDV, your insurer uses the following easily available data points:
- Registration Details
- City where the Two Wheeler is registered (RTO) - Available on the Registration Certificate
- First Purchase or Registration Date - Available on the Registration Certificate
- Current Registration Type - (Individual Owner or Company Owned)
- Vehicle Details
- Cubic Capacity: (auto populated based on Manufacturer and Model details)
- Vehicle Description: (auto populated based on Manufacturer and Model details)
- Ex-showroom Price: (auto populated from a database)
IDV and Premium
The insurance premium payable is directly proportional to the IDV. Hence, as your vehicle ages, the premium decreases. IRDA (Insurance Regulatory and Development Authority) policy states that the maximum declared value for your vehicle can be 95% of its former showroom price. Hence, within six months of purchase, the value of your vehicle depreciates by 5%. Based on the following schedule, the depreciated value of your vehicle is arrived at:
|Age of Vehicle
||% Depreciation for adjusting IDV
|Not exceeding 6 months
|Exceeding 6 months but not exceeding 1 year
|Exceeding 1 year but not exceeding 2 years
|Exceeding 2 years but not exceeding 3 years
|Exceeding 3 years but not exceeding 4 years
|Exceeding 4 years but not exceeding 5 years
Things to keep in mind while opting for IDV
As explained above, the IDV can fall within a certain range based on the ex showroom price that your insurer has considered. Those unfamiliar with the basics of IDV might opt or a lower IDV because the premium amount decreases slightly - never fall for this trap. For a few hundred extra as premium, don’t sacrifice the IDV by a few thousand.
Similarly, don’t go for a higher IDV thinking that the claim amount will consequently increase. You may also be under the false impression that a higher IDV can bring good returns while selling your vehicle. Please note that while the claim depends on the IDV, it is also influenced by the type of loss.