Picture this: You bought a new car, you are happy from the bottom of your heart! 😍 But when it comes to car insurance, you hear one term again and again – IDV. What is this IDV, brother? And why is it so important? Let’s understand its meaning in a simple, desi, and heart-to-heart style!
What is IDV?
The full form of IDV is Insured Declared Value. This is the amount which the insurance company decides according to the current market value of your car. Meaning, if your car gets stolen or there is a total loss (like in a major accident), then the insurance company will give you compensation according to the IDV. In simple language – this is the “real price” of your car in the eyes of insurance people.
For example, if the IDV of your car is ₹5 lakh and it gets stolen, then the insurance company can give you a claim of up to ₹5 lakh (minus any deductibles). Now understand, why is this a big deal?
How is IDV calculated?
Now this question arises – where does this IDV number come from? Insurance companies calculate IDV based on:
Model and Make of Car:
👉 The brand and model of your car (like Maruti Swift or Hyundai Creta) decides the IDV.
Age of Car:
👉 The older the car, the lower the IDV. Because the value of the car depreciates with time.
Accessories:
👉 If you have installed extra fittings, like alloy wheels or fancy music systems, then their value can also be added to the IDV.
Depreciation Rate:
👉 As per the rules of IRDAI (Insurance Regulatory and Development Authority of India), the value of the car decreases every year. For example, the depreciation of a new car is 5% in the first year and then gradually increases.
The formula is simple:
IDV = Car’s Ex-Showroom Price – Depreciation + Cost of Accessories (if any)
Suppose, the ex-showroom price of your car was ₹10 lakh, and it is 2 years old. According to depreciation (let’s say 20%), the IDV will be around ₹8 lakh. This is a rough estimate, the exact figure is told by the insurance company.
Why does IDV matter?
Now the question is – why is IDV so important? See, IDV is the backbone of your car insurance policy. It decides:
Claim Amount:
If your car is a total loss (theft or irreparable damage), then IDV is the maximum amount that you will get. Low IDV means low claim, and high IDV means high claim.
Premium Cost:
There is a direct connection between IDV and premium. Higher IDV = higher premium, and lower IDV = lower premium. So it is important to maintain a balance!
Policy Value:
If you deliberately keep IDV low to save on premium, then it can break your heart at the time of claim. Low IDV means low compensation. And if the IDV is high, then the premium will also increase unnecessarily.
How to be smart with IDV?
So now the question is – how to choose the perfect IDV? Follow these tips:
Honest Evaluation:
Set the IDV according to the current market value of your car. Neither too much nor too less.
Compare Policies: Get quotes from different insurance companies. The IDV calculation of each company may be slightly different.
Declare Accessories:
If you have installed extra fittings, include them in the policy so that their value gets added to the IDV.
Understand Depreciation: Keep a realistic IDV according to the age of the car. Overestimating or underestimating can cause problems.
Check at the time of renewal:
Check the IDV every year when you renew the policy, because the value of the car keeps decreasing
Common Myths About IDV
“Low IDV = Cheap Insurance”:
Yes, the premium will be less, but you will also get less money at the time of claim. Risky move!
“IDV is Fixed”
No! IDV is negotiable. You can set a realistic IDV by talking to the insurance company.
“IDV is only for theft”:
Wrong! IDV also applies in case of total loss, like a major accident or natural calamity.
Final Thoughts
IDV is like the heartbeat of your car insurance policy. It not only defines the value of your car, but also ensures your financial security when it comes to a claim. So whether you are taking or renewing car insurance, pay attention to IDV. A balanced IDV will not only keep your premium affordable, but will also give you a heart-warming smile compensation at the time of claim. 😊
Love your car, and choose its insurance policy smartly. Understand IDV, and stay tension-free!