Planning To Renew Your Car Insurance? Here’s Why It’s Important To Set The IDV Correctly

By Rawat Nov1,2023

The Insured Declared Value (IDV) is defined as the maximum sum insured, which is fixed by the insurer, and which is provided on the theft or total loss of the insured vehicle. Your car’s insurance value is the foundation for all settlements if it is stolen or suffers irreparable damage in an accident. With multiple agents, brokers, and aggregators providing various quotes, it’s essential to carefully evaluate your choices instead of directly opting for the lowest premium. . *

A comprehensive car insurance policy covers two events. The first is the risk of own damage (OD), and the second is the risk to third parties. The law dictates third-party tariff (pricing), but the OD risk premium is based on IDV. *

IDV For A New Vehicle

Initially, when you purchase a car, the IDV is established based on the brand and model’s manufacturer-listed selling price.

IDV When Renewing

The premium is computed based on the vehicle’s depreciated value during policy acquisition and each renewal. But as a car insurance policyholder, you can change the IDV. The IDV can be changed by the automobile owner when you renew car insurance. *

How Widely Can The IDV Change?

The IDV is fixed after using the table-based deprecation rate. There is still room for the policyholder to make minor adjustments. You can select an IDV between Rs 2.55 lakh and Rs 3.45 lakh if the default IDV offered is Rs 3 lakh. In the event of an accident, you might not be able to recover the full IDV value; the amount of your claim will depend on the type of claim and the extent of any vehicle damage. *

Settlement Of Claim With Greater IDV^

The settlement of a claim might not be hampered if the insurer and insured agree to a greater IDV. The insurer cannot later deny the claim based on the IDV if both the insured and the insurer have mutually agreed upon a higher IDV. Remember that for this requirement to be satisfied, the claim must be legitimate. The IDV should always be kept within a reasonable range. *

^Claims are subject to terms and conditions set forth under motor insurance policy.

Settlement Of Claim Equal To IDV^

In the second situation, the claim may be largely equivalent to the IDV, which means if a car is stolen and more than 75% of the IDV of the vehicle is damaged. A claim can be equal to the IDV if the insured vehicle remains unrecovered after extensive police and agent investigations or if the restoration cost exceeds 75% of the IDV.

An IDV calculator is a tool you may use online to determine the IDV amount of your vehicle.

^Claims are subject to terms and conditions set forth under motor insurance policy.

Renewing your car insurance with the right Insured Declared Value (IDV) is a crucial aspect of ensuring comprehensive coverage and financial protection. Setting the IDV correctly can make a significant difference in the event of a claim, as it directly impacts the payout you receive.^ By accurately assessing your car’s value and considering factors like depreciation, you can strike the right balance between premium cost and coverage adequacy. Neglecting to do so may result in underinsurance or overpayment. Therefore, take the time to review and adjust your IDV when renewing your car insurance. Also, do not forget to consult with your insurer or agent if needed to make an informed decision that suits your specific needs and circumstances.     

^Claims are subject to terms and conditions set forth under motor insurance policy.

* 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.

By Rawat

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