The term ‘IDV’ makes reference to the most your insurance company agrees to compensate if your vehicle is irreparably harmed or stolen. Assume the market price of your vehicle is Rs. 6 lakh at the time you purchase the policy. This implies the insurance company will only pay out a maximum compensation of Rs. 6 lakh.Â
Your car’s value is now depreciating from the moment you buy it. If somehow the IDV is lesser, the auto insurance premium will also be relatively less.
The insurer can see right through an inappropriately elevated value of the vehicle. The insurance company would then consider the car’s period as well as its estimated market value. Such variables will ultimately determine the portion of the liability for the insurer.
Though, you may have to pay an elevated premium and accrue damage as a result. However, a lesser IDV that is less than the legitimate current value may also cause a challenge. This is due to the fact that you might collect a lesser insurance claim. Your insurance fee is now proportional to the IDV of your vehicle. The premium will decrease as one’s vehicle ages.
How is IDV Calculated?
It is typically calculated primarily on the dealership’s advertised sale value of the vehicle’s brand and variation (including additional accessories) at the start of the auto insurance. It is calculated after correcting for devaluation each year.
If a four-wheeler is lost or significantly broken to the point where it cannot be repaired, the automobile coverage claims contract price is determined using the IDV. Which is why it is critical that your car be covered for the appropriate IDV. For this reason, an automobile insurance calculator is used.
Factors Affecting IDV Valuation
Vehicle Category
There are various kinds of vehicles commercially available. For example when we take the example of cars there are small cars, luxury cars, SUVs, and MUVs etc. All of these vehicles will be worth a unique amount of money. SUVs, for instance, have a greater price than luxury cars. Likewise, sedans are often more expensive than small cars. As a result, one of the primary things influencing a car’s IDV is the kind of vehicle.
Manufacturer and Model
The make and model of your vehicle are also crucial factors in determining its IDV. It’s due to the fact that various automobile manufacturers, even when they’re the identical sort of car, have different values (i.e. hatchback, sedan, etc.).
Ageing and Devaluation
This is among the more significant elements to consider when estimating your vehicle’s IDV. Its value depreciates from the instance you take the vehicle to your home from the showroom, it begins to devalue. And the older it grows, the less valuable it becomes. As a result, even though they are the exact same ones, manufacture, and type, an older automobile will have a lesser IDV than a newer vehicle.
Registration Location
The place wherever your vehicle is registered also has a slight impact on its IDV. This is due to the fact that the ex-showroom pricing differs by city.
Accessories
Finally, if you have installed additional accessories to the automobile, its depreciation value can be considered in computing the IDV.