What is IDV in car insurance? Why is it important?

 What is IDV in car insurance? Why is it important?

Read this article to understand what IDV is and its importance with regard to car insurance.

IDV is an abbreviation of the declared value insured. This is a concept that is used to determine the current market value of your vehicle. The declared insured value is calculated by subtracting the depreciation cost from the sale price that is defined by the manufacturer. This article will explain what IDV is with regard to car insurance and its importance. 

What is IDV in car insurance?

IDV (insured declared value) is the total or maximum amount of claim that the insurance company will pay to the car policyholder in the event of significant and irreparable damage. The amount your insurance company will pay for your claim depends on multiple factors in which the current market value of the vehicle plays a key role.

The value of your car begins to be depreciated from the moment you buy it. If the IDV of your car is low, the cost of your car premium will also be low, as will the claim amount. For the IDV account, insurance companies consider some details about the car such as the date of purchase and its model, its accessories and the number of times it was given to the service, etc. 

Your premium amount will decrease with the age of your car. The older the car, the lower the premium cost. This is mainly because there are wear and tear from auto parts as you can use it for a while. This wear and tear will reduce the efficiency of the system leading to a devaluation of the currency. Depreciation will reduce the current market value of the vehicle, which in turn reduces the amount you receive for your claim. Therefore, your premium also reduces. 

Key factors that help identify IDV

Here are some factors that act as determinants in calculating the declared insured value of your vehicle- 

The age of the car

The older the car, the lower the IDV due to increased consumption. This is mainly because the value consumed for car parts in the car will drop IDV. 

Make and model of the car 

It will make the model of the car affect IDV in a huge way depending on the cost of maintenance and repair costs. Therefore, owning an expensive car will also sum up to a higher premium than a economy class car. 

Registration City

A registered car operating in urban areas carries a high risk and will be less IDV than a car that is in the suburban area. This is mainly because cars in urban areas are at higher risk of collision or theft. 

The importance of IDV in car insurance 

The insured declared value plays a key role in determining your car's premium at the time of purchase and renewal. It is also a key factor that is considered while deciding the amount of the insurance claim in the event of extensive damage to your vehicle that cannot be repaired. Here are the cases that take IDV into account- 

While purchasing or renewing a car insurance policy 

The IDV for your car will have a direct impact on your car premium during purchase or during the renewal of your car insurance policy. The high IDV means you will pay a higher premium amount. On the other hand, a low IDV will cost you a lower premium amount. 

While getting your car insurance claim amount 

IDV plays a key role in determining how much you receive when claiming your car insurance in the event of significant and irreparable damage. The insurance company will pay you a higher amount if your car's IDV is high. On the contrary, you will be exposed to a lower amount if your IDV is low. 

Take away

The declared insured value has a significant impact on both your car premium as well as the amount of the claim. Make sure your car's IDV accounts correctly in order to be aware of the processes involved in using it. Informed decision-making is the key to owning a car insurance policy that is accessible to everyone so far provides maximum coverage. Safe engine! 

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Great Facts About IDV in Car Insurance

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Disclaimer: This article is published in the public interest and is intended for public information purposes only. Readers are advised not to rely on the contents of the article as crucial in nature, and further research or expert consultation should be conducted in this regard.