Summary/TL; DR:
Different insurers use different depreciation tables, price systems, and adjustment ranges, so online IDV calculators may give the same car different values. Most of the time, the IDV shown is an estimate within a range, not a fixed number. Calculations for auto insurance often differ slightly across systems.
Introduction:
Every car owner should insure their vehicle to protect against various risks. While third-party vehicle insurance is mandatory under the Motor Vehicles Act, 1988, it's also essential to have comprehensive car insurance. Comprehensive insurance provides complete protection for your vehicle.
With comprehensive insurance, you can also purchase a wide range of add-ons to enhance the coverage. IDV, or Insured Declared Value, is also an important consideration. However, if you use an IDV calculator for car, you'll find different values on different websites. Let's explore why it is so.
What is IDV in Car Insurance?
IDV, which stands for "Insured Declared Value," is the most your insurance company will pay if your car is stolen or deemed a total loss. This figure shows the market value of the insured car on that day.
IDV is calculated by taking the manufacturer's suggested retail price of the car and all its parts, and subtracting the amount by which they have lost value. The price does not include the cost of registration, road tax, or car insurance. The IDV has an immediate effect on both your payment and the amount of benefit you receive.
For instance, if a car is stolen and its calculated IDV is ₹5 lakh, the insurance company may pay up to that amount, provided the policy allows it.
Why Do Different IDV Calculators Reflect Different Values for the Same Car?
Because insurers use their own data sources, depreciation estimates, and acceptable IDV ranges, different IDV calculators may show slightly different numbers. A car insurance company gives you an IDV band instead of a single number. Different calculators may choose different points in this range. Platforms often show differences of between 5 and 10%.
Read More:Essential Parameters to Compare Car Insurance Online
What if two insurance companies have different databases or ways of adjusting for different vehicles? One IDV calculator for car might give a slightly higher IDV number than the other for the same vehicle information.
How Is the Recommended Highest or Lowest IDV Calculated?
The suggested IDV range is determined when you buy car insurance online by subtracting the vehicle's ex-showroom price from the applicable depreciation and taking into account other vehicle-specific factors.
Most of the time, insurers look at the car's registration state, the year it was made, the make, the model, the variant, and the registration year. These data help figure out how much the car is worth on the market right now. The car insurance company then gives you a choice of acceptable IDVs that are within the rules.
Read More:How Car Model, Age and Location Impact Your Car Insurance Premium
Different places may have slightly different IDV ranges for cars of the same model. This is because on-road price trends can change.
How to Use the IDV Calculator for a Car?
You can find out how much your car is worth for insurance purposes using an IDV calculator and entering your car's registration number, make, model, variant, and year of manufacture.
Start with the car's "ex-showroom" price, and the tool will figure out how much it has lost in value over time based on its age. While staying within the insurer's allowed range, most tools only let you change the IDV in small ways. This helps determine both the policy's value and its effect on the premium.
What will happen if you change the IDV? When you choose an IDV near the bottom of the range, the premium may decrease, but if you have a total loss, the claim amount will also decrease.
Read More: Step-by-Step Guide - How to Calculate Car Insurance Premiums
How to Determine The Best IDV for Your Car?
Using an IDV calculator for car can give you an approximate range for which one would be the best. With different calculators showing different values, it is quite natural to be confused about which one is the best for your vehicle.
Here's the accurate formula for calculating the IDV of your car:
The total amount you paid for the car (including accessories but excluding registration and taxes) - the depreciation value of the car (depending on the year).
The insurer usually calculates the depreciation value of the car based on the year. Everycar insurance company lists the depreciation value based on the car's age on its website and in its policy wording.
However, the standard depreciation value that the insurers follow includes:
- Up to 6 months: 5%
- 6 months to 1 year: 15%
- 1 year to 2 years: 20%
- 2 to 3 years: 30%
- 3 to 4 years: 40%
- 4 to 5 years: 50%
- Above 5 years: Based on negotiation
While you're calculating the IDV of your car, it is important to note that this will be different from the Zero Depreciation add-on cover for your car. It is extremely important to select the correct IDV for your car to get accurate coverage while avoiding higher premiums. This is more so important for thefirst time car owners in India.
Remember that you can only go for IDV with your comprehensive car insurance policy and notthird party insurance.
Can the IDV of a Car Be Incorrect?
Yes, in some scenarios, the car's IDV can be incorrect. While buyingcar insurance online, review the terms and conditions thoroughly. If the chosen value is higher than your car's resale value, you don't have to worry. This is mostly because the insurer has agreed to the value and has provided approval.
However, if you notice a discrepancy and the IDV is significantly lower than the resale value, you will have to contact your insurer immediately. You should request that they update the IDV coverage for your car insurance policy. However, for the increased valuation, you may have to pay a higher premium. In some cases, the insurer may also cancel the policy. If the current insurer cancels your policy, you'll have to buy a new insurance policy from another insurer.
What Factors Affect the IDV for a Car?
Various factors can affect the IDV of your car. These usually include:
1. Age of the vehicle:
The older the vehicle, the more its value will decrease. If you choose a lower IDV, your premium will be lower, but you will also receive a lower claim settlement amount.
2. Make, Variant, and Model:
These factors significantly impact the IDV. The same car in a higher variant is likely to have a higher IDV than the base variant.
3. Registration place:
If the road taxes are higher in a particular region, the IDV for the vehicle will be higher. The on-road prices of vehicles in metro cities are higher than those in smaller cities. Therefore, the vehicle registered in metro cities will have a higher IDV.
4. Vehicle condition:
There is no standard value for a car older than five years. The insurance companies need proof to determine the condition of your car. These insurance companies will also consider your car's claim and maintenance history to determine the IDV.
Read More:Insuring Used Cars - Key Considerations
You mayuse a car insurance premium calculator for your car while also calculating the IDV. This can help you get better clarity on how much premium you have to pay.
Expert Note
This information is based on standard motor insurance guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) and commonly followed industry practices. Policy coverage and conditions may vary by insurer.
Read More:IRDAI Car Insurance Claim Settlement Ratio and Process
FAQs
Not all the time. If the IDV goes up, the premium may go up, but how much relies on how the insurance company sets its prices.
You can change your IDV only when you renew your contract or get an endorsement from the car insurance company.
Not often, no. If you want to include extra items in the value, you may have to list them manually.
Yes. Once the car insurance policy is given, the IDV usually stays the same until the next renewal, unless it is officially changed.
Yes. When determining the IDV for used cars, insurers may also consider inspection records and the negotiated market value.
" />
