Today, almost every household owns a vehicle — be it a two-wheeler or a four-wheeler. To safeguard against unexpected events like accidents, theft, fire, or natural calamities, most people opt for comprehensive vehicle insurance. But when it comes to claim settlement, the amount you receive isn’t arbitrary — it is based on a concept called Insured Declared Value (IDV).
📌 What Is IDV?
· IDV (Insured Declared Value) is the maximum sum assured that an insurance company will pay you in case of total loss or theft of your vehicle.
· It essentially represents the current market value of your vehicle.
· IDV is determined at the start of your policy and is usually revised annually to account for depreciation.
💡 How IDV Is Calculated
The IDV is primarily based on two factors:
1. Ex-Showroom Price of the Vehicle:
o This is the price of the vehicle at the time of purchase.
2. Depreciation Factor:
o Depreciation reduces the value of your vehicle over time.
o Insurance companies apply a standard depreciation rate based on the age of the vehicle:
§ Less than 6 months: 5% depreciation
§ 6 months to 1 year: 15% depreciation
§ 1–2 years: 20% depreciation
§ 2–3 years: 30% depreciation
§ 3–4 years: 40% depreciation
§ 4–5 years: 50% depreciation
Example: A 2-year-old car with an ex-showroom price of ₹10 lakh may have an IDV of around ₹7 lakh after applying depreciation.
📌 Why IDV Matters
1. Claim Settlement:
o The IDV determines the maximum claim amount for total loss or theft.
o Choosing a lower IDV may reduce premiums but can result in lower claim amounts.
o Opting for an inflated IDV may increase premiums and can lead to claim rejection.
2. Premium Calculation:
o IDV directly impacts your insurance premium.
o Higher IDV = Higher premium; Lower IDV = Lower claim amount.
3. Comprehensive Insurance Benefits:
o For accidents, natural calamities, fire, or theft, the claim is generally settled based on IDV.
💡 Tips for Vehicle Owners
· Review IDV Annually: Ensure your IDV reflects the current market value of your vehicle.
· Avoid Drastic Under- or Over-Valuation: Underestimating IDV may reduce claim amount, while overestimating may lead to higher premiums or claim rejection.
· Consider Additional Coverage: Optional add-ons like zero depreciation, roadside assistance, or engine protection can enhance your coverage.
📌 Final Thoughts
Understanding IDV (Insured Declared Value) is crucial for any vehicle owner. It not only determines your insurance premium but also ensures that you receive a fair settlement during claims. By keeping your IDV updated and choosing the right coverage, you can protect your vehicle without paying extra or compromising on claim value.
Disclaimer:
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk..jpg)
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