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IDV means insurance declared value and this is an important factor when it comes to insuring a vehicle such as a car. In fact, when it comes to getting a comprehensive car insurance policy this is the most important factor for sure. Now you may be wondering if it makes sense to decrease or increase the same. The insurance declared value of a car is the maximum sum insured that your insurer is willing to pay you – the policyholder in case you lose the vehicle completely or if it gets stolen. This is in fact also applicable in case of partial loss of your vehicle.
So, the term IDV means the present worth of your car in the market. You normally calculate the value by looking at the present value of your car as determined by the insurer and adjusting it with the depreciation of the vehicle over the years for which it has been used.
For this, we would have to look at an example rather than go theorizing about the same. If you look at OD (own damage) cover it is a beneficial cover. Yet it is optional.
If you have such coverage you get financial compensation in case the car is totally lost owing to a calamity or an accident. Now the premium that you pay for such coverage would be based on your car’s IDV in insurance. It is a percentage of the same, normally in the range of 2 to 3%. In this case, the insurers look at factors such as the cubic capacity of your car’s engine and its age. Just remember that the higher the IDV the greater is the premium. It works the other way round too.
So if you have not calculated the IDV of your car you would not be able to get an idea of the premium that you need to pay for your OD coverage. So, you need to know IDV meaning in insurance. Now, you may think that perhaps it would be better if you lowered the insurance declared value of your car with respect to its current market value. The simple reason for this is the direct link between the car’s IDV and its OD premium. If the IDV is lower you have to pay a lower premium. You should know that the reduction of premium is the only benefit that you would get from this.
In case your insurance declared value is lower you would get a lower compensation in case your car meets with an accident of some sort or the other. On the other hand, you may also think that increasing the insurance declared value of your car would be a good idea but that is also not the right idea to have in these cases. It is not as if you can claim higher amounts or sell your car at a higher price than its actual value if it has a high insurance declared value. It is basically the maximum compensation that your insurer is willing to offer for your car.
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What is IDV in insurance? Do you know that? In that case, you should know that it is calculated based on how old your car is. If your car is six months old or younger its price would have depreciated by 5%. In case it is between six months and a year old the rate of depreciation would be 15%. If the car is between one and two years old it would see a 20% depreciation in its price.
The rate of depreciation would increase to 30% if the car is between two and three years old. If it is between three and four years this rate of depreciation would go up further to 40%. It is based on such depreciation that the IDV of your car would be calculated.
You already know what IDV means. The one thing consistent about car insurance – like everything else in life – is that it would always change. The coverage that it provides you with would not stay the same throughout the policy coverage tenure. The same can also be said of the premium that you pay for the same. So, whenever the time to renew your policy comes up you must not readily agree to what your insurer is telling you.
Always check the insurance declared value of your car. You already know the importance of IDV in insurance. Thus, you also need to find out if you are paying a justifiable premium on your policy or not in the new agreement. If the value of your car is higher you would have to pay a higher premium for the same. This is also the correct time when you should be adjusting the insurance declared value by lowering or increasing it as you see fit. This is especially possible when you are doing so online.
Insuring your car is a long-term project. So, you must know what IDV meaning in insurance is. In these policies, there is always a chance that you would not get the amount that you claim from your car insurer. Now, the reason why your reimbursements go down is the insurance declared value of your car. This is why this is the most important factor that you must check when you are buying these policies. As far as car insurers are concerned, these vehicles are nothing but liabilities whose values are going down each year. However, for you the insurance declared value is important.
Also Read: Car Insurance Calculator – Know How to Use
This is because IDV is the maximum amount that can claim as compensation for the losses your car has suffered. This is why you are well within your right to preserve an insurance declared value of your car as you see fit.
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