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# What Is IDV In Car Insurance & How To Calculate It

## The insured declared value (IDV) is the highest amount you can claim if your insured four-wheeler is lost or damaged.

Buying a car was considered a luxury a decade ago, but it is now necessary. When picking your dream car, you spend days researching the features, pricing, mileage, warranty, and other factors. Once you have completed this and decided on a car, the following step is to research insurance.

Car insurancein India is required by law. However, you must first understand many terminologies to receive the optimum advantage while filing a claim. One such term to be aware of is 'Insured Declared Value.'

## Understanding Insured Declared Value

The insured declared value (IDV) is the highest amount you can claim if your insured four-wheeler is lost or damaged. For example, you paid Rs 10 lakh for a car but declared its IDV to be Rs 3 lakh after six years of use. In this instance, if your car is irreversibly damaged, the claim, regardless of purchase price, is limited to IDV owing to depreciation and other circumstances.

Remember, if you set the IDV too high, you might end up paying for coverage you don't need, as it won't increase the car's resale value. Conversely, setting the IDV too low to save on premiums can lead to inadequate coverage in case of total loss or theft.

## How to Compute Insured Declared Value?

Before we discuss IDV in the car insurance computation process, you should first understand the depreciation rate set by IRDAI.

 Age of the Insured Car Depreciation Percentage Less than six months 5% Between six months and a year 15% Between one and two years 20% Between two and three years 30% Between three and four years 40% Between four and five years 50%

IDV is calculated using the manufacturer's selling price and the depreciation mentioned above. Check out the formula below.

IDV = (Selling Price Quoted by Manufacturer – Vehicle's Depreciation Amount) + (Cost of Additional Accessories – Depreciation of these Accessories).

· Car without any additional accessories

IDV = (Selling Price Quoted by Manufacturer – Vehicle's Depreciation Amount)

## Factors that Affect the Insured Declared Value of Your Car

The following are the aspects that impact your car's IDV:

1. Type of car

In India, there are different vehicle categories. These include SUVs, sedans, MUVs, hatchbacks, and now EVs, the preceding sub-category.

For example, the cost of purchasing an SUV might range from Rs 25 lakh to a few crores. On the other hand, if you want to buy a hatchback, you will just have to spend between Rs 5 and Rs 8 lakh.

And as you know, the more expensive the vehicle, the higher the IDV, and vice-versa.

2. Car Model

Even the same type of car might have a different IDV. For example, you have a sedan with a petrol engine. On the other hand, your friend has a sedan equipped with an electric engine and many advanced features. In this case, the IDV of the EV will be higher.

3. Location

You may not be aware, but the city where you purchase your car remains a crucial factor in calculating IDV. This is because dealer prices and road taxes differ from one city to the next.

The place of registration is also important. If your car is registered in an area with high accident rates or a high risk of landslides, earthquakes, or other natural disasters, the IDV will be higher.

4. Accessories

Many cars on Indian roads have aftermarket equipment, such as a high-end sound system and a bespoke rim. Like all other components on a four-wheeler, these extras are susceptible to depreciation, which affects the IDV.

## What is an IDV Calculator?

Nowadays, many insurers have integrated IDV calculators on their websites, which provide relief from complex manual computations.

Here are the steps on how to use these calculators.

· Visit your motor insurer's website.

· Go to the car insurance section.

· Share your insured vehicle's registration number.

· Share the vehicle's variant, make and model, fuel type, and registration date.

· Mention your contact number and policy expiration date, with a few additional information.

· Click on submit, and your screen will display the IDV along with various customised insurance plans.

## Conclusion

IDV is the most critical concept in motor insurance. The higher the IDV, the higher the premium. Many car owners submit inaccurate values to save a few pennies on premiums. However, doing so can lead to claim rejection or lower compensation.

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