IDV of Vehicle and its Importance while Insuring Vehicles
Motor insurance third party liability is mandatory as per legal regulations. However, opting for a comprehensive motor insurance cover is advisable for a larger cover, which helps to deal with unforeseen situations. In case you face financial difficulties due to vehicle breakdown or an accident, a comprehensive motor insurance helps in safeguarding your finances and helps in dealing with such contingencies efficiently. Hence, to procure adequate coverage, a comprehensive plan is recommended.
Vehicle insurance premium may be higher for availing of comprehensive cover. However, you need to clearly understand what you are paying for before buying a policy. Insured declared value (IDV) is one important factor to look for.
Let us understand what IDV means. In simple terms, the IDV is the market value of your vehicle. It refers to the maximum amount that will be paid by the insurance company in case of a total loss claim subject to applicable deductibles/excess as per the terms & conditions. In case your vehicle is damaged or stolen, the insurer will pay the IDV as the maximum claim amount subject to applicable deductibles/excess as per the terms & conditions.
You may want to know how IDV is calculated. It is calculated basis the manufacturer’s selling price and adjusted for depreciation subject to age of the vehicle. Furthermore, externally fitted accessories are separately calculated and insuring these requires paying an additional premium.
How IDV affects motor insurance
Let us see why IDV is important while purchasing car or two-wheeler insurance.
1. Premium amount
The motor insurance premium depends on factors like the type of vehicle, its value, cubic capacity, place of registration and age. The premium also depends on the IDV value of your bike or car. The IDV will change as your vehicle becomes older, which in turn affects the premium payable at the time of renewing the policy.
2. Adequate coverage
It is very important that the IDV of vehicle is accurately calculated. This ensures your vehicle is not under-insured, which may affect your financial situation in case of a claim. It is recommended you verify the details before buying an insurance policy.
It is recommended to always get the correct IDV of the vehicle and one should not get lured by lower IDV to pay lower premium.