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    You have heard of IDV, but do you really understand IDV?

    Car insurance can be tricky business.That is why you must read your policy documents carefully.Besides, there may be certain terms that you are unaware of. Take the case of Saman Ali, a 25-year-old human resources manager. Her car had not yet had a breakdown or been in an accident. In June this year,she bought a car insurance policy with an own damage clause. She did so at a lower insured declared value (IDV). A week later, Saman’s sedan suffered serious damage in an accident. But the insurer’s claim disbursement did not meet Saman’s expectations. It was all because of the low IDV.

    What is IDV?

    The term ‘IDV’ refers to the maximum claim your insurer will pay if your vehicle is damaged beyond repair or is stolen. Suppose the market value of your car is Rs 8 lakh when you buy the policy. That means the insurer will disburse a maximum amount of Rs 8 lakh. 

     

    Did You Know: Your IDV keeps falling!

    Now,the value of your car begins depreciating from the minute of its purchase. If the IDV is low, then the car premium will also be low.

     

    Could you inflate your IDV? You could, but the insurer will recognise this ploy.The insurer will factor in the age of the car andits value in the current market. These factors will finally decide the claim amount. Unfortunately, you may end up paying a higher premium and incur losses. But a lower IDV that is less than the reasonable market price may pose a problem too. This is because you will receive a lower claim amount.

     

    Now, your insurance premium is directly proportional to the IDV of your car. As your car becomes older, the premium will reduce.

    To calculate IDV, the following table is used:

    Age of Vehicle

    Percent depreciation for calculating IDV

    Not exceeding 6 months

    5%

    Exceeding 6 months but less than 1 year

    15%

    Exceeding 1 year but less than 2 years

    20%

    Exceeding 2 years but less than 3 years

    30%

    Exceeding 3 years but less than 4 years

    40%

    Exceeding 4 years but less than 5 years

    50%

    The calculation of the IDV depends on the following aspects:

    ·         Manufacturer, make, and model of the car.

    ·         Details of car registration, including the city ofregistration.

    ·         Date of registration of your car.

    ·         Whether it is a private car or one owned by a company.

    ·         Cubic capacity and ex-showroom price of the vehicle.

     





    If your car is more than five years old or the model has been phased out, here is what you should know. You may have to speak with your insurer directly and agree on a suitable value. But the insurer will first perform a thorough inspection of your vehicle. You could go with what your insurer advises.But make sure to know the facts and make a wise choice. 

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