If simply put, IDV is the acronym for Insured Declared Value. In layman terms, it is the current market value of your car, from insurance’s point of reference. It refers to the highest value of money that would be payable by the insurer company per the terms of your vehicle’s insurance policy.
There might be cases where your vehicle may be subject to a total loss or a total constructive loss. It might so happen that it gets stolen, or even gets damaged to a point that it cannot be repaired. In all such cases, the vehicle IDV would be the maximum amount that you can claim from the insurance company.
IDV is very crucial in determining the actual value of your car. In case you suffer any mishappening or damages, you are eligible to get the maximum financial protection if you know your vehicle’s IDV.
A high IDV constitutes a higher premium you need to pay to buy a policy or insurance. It can be a hassle at first, but it justifies the price tag in the long run. On the flip side, undervaluing your vehicle’s IDV may seem a smart idea at first, but it can hamper the car’s actual market value, and it significantly drops the insurance rates as well.
IDV calculator is a tool used by car owners to estimate the IDV of their vehicles. As the importance of IDV has increased prominently in the last couple of years, the usage for the IDV calculators has also risen. You need to fill in specific details, such as Age of your vehicle, and the number of kilometres it has piled up to calculate the exact amount of market depreciation it has faced and the remaining value.
IDV can affect you in several ways;
The following is a universal IDV calculate table used by manufacturers to compute an accurate IDV for your vehicle:
|Age of Vehicle||% Depreciation for adjusting IDV|
|Not exceeding 6 months||
|Exceeding 6 months but not exceeding 1 year||
|Exceeding 1 year but not exceeding 2 years||
|Exceeding 2 years but not exceeding 3 years||
|Exceeding 3 years but not exceeding 4 years||
|Exceeding 4 years but not exceeding 5 years||
The table depicted above can help in calculating the IDV. If your car is less than six months old, then depreciation will be less than 5%, mainly because the engine is still fresh and many safety policies by manufacturers are still backing the vehicle.
The depreciation rates take a toll after six months, as the overall structural integrity starts to vary out. After exceeding one year, the depreciation rate increases to 20%, due to many manufacturers’ safety policies being exhausted by this time period.
This rate keeps exceeding by 10% each year under it exceeds the 5-year mark. After that, you need to reevaluate your vehicle from any vendor or manufacturer in order to get the actual market price.
To determine vehicle IDV, proper calculations are to be done. To do the same, the insurance companies usually operate on certain easily available parameters and then adjust those with the standard available car depreciation rates, set by the Indian Motor Tariff. The factors are listed below:
It is an important thing to note that as your vehicle ages, the premium that you give decreases. It is because of the fact that the IDV is directly proportional to the payable Insurance Premium.
Have You Check IDV Yet?
While car IDV determines the value of your car, it does so strictly for insurance purposes. On the other hand, car valuation is the market value of your car, which you can get if you wish to sell it. It differs from the IDV as the considerations for both are different. Car valuation also depends upon the demand and supply of your car.
For example, the IDV of your vintage car might be extremely low, but its car valuation will be very high since it is rare. Also, the car valuation depends upon the condition of your car and its engine, whereas the IDV would only go by the age of the car and not its conditions.
Therefore, IDV though similar in nature, is starkly different from car valuation.
IDV is referred to as Insured Declared Value, or merely the amount of your car insured from all the underlying policies to any physical, depreciative, or theft damage. The actual valuation of IDV decides the type of insurance best suited for you.
You can check the IDV value of a car through various IDV calculators. These calculators will outline the current market value of the vehicle with some exceptions and scenarios. You can calculate the IDV yourself as well, keeping some parameters in mind. Also, if your car is more than 5 to 6 years old, then you have to re-evaluate it physically from a vendor or manufacturer to derive its market value indeed.
Yes, you can do some things to increase your vehicle’s IDV. Regular engine check-ups with up-to-date insurance can boost the IDV of your vehicle significantly. If your car has not suffered any accidental damage, it tends to increase the IDV rating. But if you try to increase IDV through any other means, then it can hamper the market value in the long run.
IDV is calculated based on the current market value. You can calculate the IDV of your vehicle according to the years of usage and physical depreciation. The easiest way to figure it is by using an online IDV calculator, but you can do it yourself as well by applying this simple formula. IDV = (Manufacturer’s Selling Price – Depreciation Cost) + (Accessories Cost – Depreciation of These Accessories)
Usually, the IDV of a new car is around 95%, with only a 5% depreciation rate the moment you take the car out of the showroom. For the initial 6 months, the depreciation remains stagnant at 5% but after the 6-months mark the rate jumps up to 10-15%. IDV also partially depends on the policies provided by the manufacturers.