Importance of Insured Declared Value (IDV)
IDV is the maximum liability undertaken by the insurance company with respect to your vehicle. It represents the value of your vehicle as calculated by the insurance company, based on the vehicle’s market value after deducting depreciation. IDV decides insurance coverage, premiums, and maximum claim amount.
Calculation of IDV
IDV is calculated based on the current selling price of your car, after deducting the necessary depreciation amount. The formula to calculate the Insured Declared Value is:
Insured Declared Value (IDV) = (Company’s listed price – the depreciation value) + (Cost of car accessories – the depreciation value of these parts)
Role of IDV in Insurance
Understanding IDV empowers policyholders to make informed decisions about coverage while managing premiums. Higher IDV means higher coverage and premiums, while low IDV means lower premiums and claims. In case of total loss or theft, the insurance company will pay the IDV amount. IDV decreases with depreciation, leading to lower premiums.