Nov 30, 2023
Insured Declared Value (IDV) In Motor Insurance: A Complete Guide
Buying the right motor insurance for your vehicle is a crucial part of owning a vehicle. According to Section 146 of the Motor Vehicles Act, 1988, the owner of a vehicle is required to have a third-party liability insurance policy. This allows them to have support when they have caused harm to another’s property However, if one wants enhanced coverage that allows one to get coverage for their own vehicle as well, opting for a comprehensive coverage is advisable. When doing so, you must know what to expect from a policy, by understanding it well.
Motor insurance is a type of policy that is not permanent. It offers coverage for a limited duration and requires regular renewal. When renewing your policy, it is essential to have a clear idea of the terminology and the primary factors that determine the details of your policy. One of the most important considerations when buying or renewing your vehicle insurance is IDV.
What is IDV?
While people who have across motor insurance may recognise the term IDV, it is important to also know the Full Form of IDV and why it is an important aspect of your motor insurance policy. This may help you understand your policy better .
IDV is an abbreviation for the term “Insured’s Declared Value”. The IDV of your car, bike, or any other vehicle is deemed to be the Sum Insured for the purpose of tariff calculation and it is usually fixed at the commencement of each policy period for each insured vehicle. The IDV is fixed on the basis of the manufacturer’s listed selling price of the particular model of the vehicle.*
The IDV is fixed on the basis of the manufacturer’s listed selling price of the particular model of the vehicle at the commencement of the policy or at the time of renewal of the vehicle insurance policy. IDV is treated as the “Market Value” throughout the policy period without any further depreciation for the purpose of Total Loss (TL)/Constructive Total Loss (CTL) claims.*
How Is IDV Calculated?
IDV is calculated by adjusting the current manufacturer’s Listed Selling Price of the vehicle with depreciation percentage.* Here is a formula to understand how the Listed Selling Price of the manufacturer is calculated:
Here is a table that gives a glimpse of the depreciation percentage based on the age of the vehicle:
AGE OF THE VEHICLE
|
% OF DEPRECIATION
|
| Not exceeding 6 months |
5% |
| Exceeding 6 months but not exceeding 1 year |
15% |
| Exceeding 1 year but not exceeding 2 years |
20% |
| Exceeding 2 years but not exceeding 3 years |
30% |
| Exceeding 3 years but not exceeding 4 years |
40% |
| Exceeding 4 years but not exceeding 5 years |
50% |
If the age of the vehicle exceeds five years, the IDV value will be agreed upon between the insurer and the insured. This would be true for obsolete models as well.*
Alternatively, you could also use an online IDV calculator to get a clear idea of how much the IDV for your vehicle will be. It will take into consideration the age of your vehicle and give you an estimated IDV for the same. Knowing your vehicle IDV is essential when it comes to understanding the limit of the amount you can expect from your insurance provider in case a claim is made.* Claims are subject to terms and conditions set forth under the motor insurance policy.
Things To Remember
The IDV is one of the important aspects of your policy. As a policyholder, it may be advisable for you to be aware of what your IDV is, and what it may mean for you when making a car insurance claim. Moreover, you would also know what to expect during your next car insurance renewal, based on how old your car is.*
Here are a few key things to remember about IDV in car insurance.
- The right IDV declaration means a better chance of an appropriate claim for the vehicle. Claims are subject to terms and conditions set forth under the motor insurance policy.
- The IDV can be one of the factors influencing your premium costs. While a lower IDV may mean a lower premium, it would also mean a lower claim amount.
- An IDV calculator can help you ensure that you know what IDV to expect from your policy. You may also consult your insurance provider for further clarity.
- If the aggregate cost of the repair or retrieval of the vehicle exceeds 75% of the total IDV, the insured car will be treated as Constructive Total Loss (CTL).
To put it more simply, IDV is the Sum Insured value of your car insurance policy. One of the most important factors your IDV depends on is the age of your vehicle. Beyond the age of 5 years (of your car), the IDV can be discussed with your insurance provider. An IDV calculator may help you get estimates. Before you buy a policy, ensure that you are aware of all the necessary policy details.*
* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.
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