Car insurance decisions can be overwhelming, especially when it comes to the critical factor of insured declared value (IDV). Understanding the meaning of IDV, car insurance IDV, and how to increase the IDV value of your car can significantly impact your financial security. Let's dive into whether boosting your IDV is the right move for your vehicle's protection.
When it comes to car insurance, one of the most important factors to consider is the insured declared value (IDV) of your car. IDV is the maximum amount that your insurance company will pay in case of a total loss or theft of your car. It is essentially the current market value of your car, taking into account depreciation.
But the question is, should you increase the IDV of your car? In this article, we will explore the meaning of IDV, the factors that affect it, and whether or not you should increase it.
What is IDV, and how is it calculated?
Understanding IDV Meaning
IDV stands for Insured Declared Value and is the maximum amount that your insurance company will pay in case of a total loss or theft of your car. It is calculated based on the manufacturer's listed selling price of the car and the depreciation value.Factors Affecting IDV
The IDV of your car is not a fixed amount and can vary based on several factors. These include:- Age of the car: As a car gets older, its value decreases due to wear and tear. This is reflected in the IDV as well.
- Make and model of the car: The make and model of your car also play a role in determining its IDV. Luxury cars and high-end models have a higher IDV compared to budget cars.
- City of registration: The city where your car is registered can also affect its IDV. Cars registered in metropolises tend to have a higher IDV compared to those registered in smaller cities.
- Modifications: If you have made any modifications to your car, such as adding new features or upgrading the engine, it can increase the IDV of your car.
- Insurance company: Different insurance companies may have different methods of calculating IDV, which can result in varying values for the same car.
How to Increase the IDV Value of Your Car?
If you feel that the IDV of your car is not sufficient, you can increase it by following these steps:
1. Request for a Higher IDV
The first step is to contact your insurance company and request a higher IDV for your car. You can provide them with the necessary details, and they will calculate the new IDV for your car.
2. Provide proof of modifications.
If you have made any modifications to your car, such as adding new features or upgrading the engine, you can provide proof of these modifications to your insurance company. This can help increase the IDV of your car.
3. Compare insurance quotes.
Before finalizing a higher IDV, it is always a good idea to compare insurance quotes from different companies. This can help you get the best deal and ensure that you are not overpaying for your car insurance.
4. Consider the age of your car.
While it is possible to increase the IDV of your car, it is important to consider the age of your car. If your car is too old, the insurance company may not agree to increase the IDV significantly.
5. Check the premium amount.
Increasing the IDV of your car can also result in an increase in your insurance premium. Make sure to check the premium amount before finalizing on a higher IDV.
Can IDV be increased from the previous year?
Yes, it is possible to increase the IDV of your car from the previous year. However, it is important to note that the IDV of your car will decrease every year due to depreciation. So, if you want to increase the IDV from the previous year, you may have to pay a higher premium.
Should you increase the IDV of your car?
Now that we have explored the meaning of IDV and how to increase it, the question remains: should you increase the IDV of your car? The answer to this question depends on several factors.
- Age of Your Car If your car is relatively new, it may be a good idea to increase the IDV. This will ensure that you receive a higher payout in case of a total loss or theft of your car.
- Cost of Modifications If you have made significant modifications to your car, it may be a good idea to increase the IDV. This will ensure that the value of your modifications is also covered in the event of a total loss.
- Insurance Premium As mentioned earlier, increasing the IDV of your car can result in an increase in your insurance premium. Make sure to compare quotes and consider the premium amount before making a decision.
- The Resale Value of Your Car If you plan on selling your car in the near future, it may be a good idea to increase the IDV. This will ensure that you receive a higher payout in case of a total loss, which can help offset the cost of purchasing a new car.
- Risk of Theft If you live in an area with a high risk of car theft, it may be a good idea to increase the IDV of your car. This will ensure that you receive a higher payout in the event of theft.
How to Calculate IDV
Using an IDV Calculator
To calculate the IDV of your car, you can use an IDV calculator. You can visit our IDV calculator page to calculate you IDV, It’s very easy to use. All you need to do is enter the make, model, and age of your car, and the calculator will provide you with the IDV.
Manual Calculation
If you prefer to calculate the IDV manually, you can use the following formula:
IDV = (Manufacturer's listed selling price - Depreciation) + (Accessories not included in the manufacturer's listed selling price - Depreciation)
The depreciation rate is determined based on the age of the car, as follows:
| Age Of Vehicle | % Of Depreciation For Calculating IDV |
|---|---|
| Upto 6 Months | 5% |
| 6 Months to 1 Year | 15% |
| 1 - 2 Years | 20% |
| 2 - 3 Years | 30% |
| 3 - 4 Years | 40% |
| 4 - 5 Years | 50% |
To better understand the impact of increasing IDV, let's look at a real-world example.
Assuming you have a 3-year-old car with an IDV of ₹300,000 and a premium of ₹30,000. If you increase the IDV to ₹350,000, your premium may increase to ₹35,000. In case of a claim, you will receive a higher payout of ₹350,000 instead of ₹300,000. However, you will also have to pay a higher premium of ₹5,000 per year.
Takeaways
The insured declared value (IDV) of your car is an important factor to consider when purchasing car insurance. It is the maximum amount that your insurance company will pay in case of a total loss or theft of your car. While it is possible to increase the IDV of your car, it is important to consider the age of your car, cost of modifications, insurance premium, resale value, and risk of theft before making a decision. By following the steps mentioned in this article, you can increase the IDV of your car and ensure that you are adequately covered in case of an unfortunate event.
Must Read: Know Your IDV in Car Insurance
