Car Insurance In India Explained

Car Insurance In India Explained – Have you ever wondered how much your car insurance will pay if it’s stolen or totaled? IDV is right here, the most understandable term in auto insurance! 

The IDV value represents the maximum amount you will receive if your vehicle is stolen or written off. Therefore, choosing the right IDV using the IDV calculator is very important as it affects your claim amount and insurance premium.

Car Insurance In India Explained

We know there are confusing insurance terms out there, but it’s important to familiarize yourself with one of those terms, IDV. The full form of IDV in insurance is ‘Insured Value’.

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IDV in car insurance refers to the current market value of your car. In other words, how much your car will earn in today’s market. 

This auto insurance IDV helps your insurance company or us determine the correct amount of your claim during the claims process. In addition, it will also help us determine the right insurance rate for your auto insurance.

Let’s say you bought a new car for £10m, so your car’s new IDV would be £10m. 

However, as your vehicle ages, its value begins to depreciate, resulting in a lower IDV. So, say two years from now your car is worth £6 million. Its IDV will also be £6 million according to the IDV calculator after taking various factors into account.

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Remember that if you sell your car for £7,000, your car’s IDV will still be £6 million. This IDV value is the value of your car, not the value the car can be sold for.

Declared Value is the soul of your favorite auto insurance, and there are three main reasons why auto insurance:

IDV calculator is one of the most important insurance calculation tools as it helps to determine not only the market value of the car but also the amount of insurance that you have to pay for your car insurance.

Car IDV calculator calculates the value of car parts by taking into account the car’s ex-showroom price / current market value. In addition, car registration fees, road tax and insurance premiums are not taken into account when calculating ID.  

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This also helps us (the insurance company) determine the appropriate amount to pay during the claim process, in the event that your vehicle is stolen or damaged beyond repair, God forbid.

You can use the IDV calculator to calculate the actual declared insured value or refer to the formula provided. Additionally, IDV will be charged separately if your vehicle is equipped with accessories or non-factory-installed modifications, as these incur additional costs.  

Insured Declared Value (IDV) = (Indicated Company Value – Depreciated Value) + (Cost of Vehicle Parts – Depreciated Value of the Parts)

Calculating the IDV for a car is based on the car manufacturer’s selling price and the insurance company’s depreciation rate based on the age of your car. Depreciation rates rise to a maximum of 50% for vehicles less than 5 years old.

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So, for a car that is more than 5 years old, its IDV is calculated by the insurer. They decide the amount of depreciation after a thorough inspection of the car’s components.

Depreciation is an important factor in calculating IDV in car insurance. The more parts your car has, the lower the IDV. 

This is because, as a car ages, its value gradually decreases and loses its fair market value, or IDV, over time. 

So, in case your car is stolen or totaled, you will get less compensation from the insurance company.

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With the help of the following example, let’s understand how to use the depreciation rate to calculate the IDV of your vehicle.

For example: Let’s say your car is less than 6 months old, the current ex-showroom price is £100, and the depreciation rate in the above table is only 5%.

If your car is more than 5 years old, the IDV depends on the condition of the car – parts, make, model and availability of spare parts.

When reselling, the IDV shows the market value of your vehicle. However, if you take good care of your car and keep it sparkling like new, you can always get a higher price than what IDV offers. At the end of the day, it all depends on how much love you put into your car.

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Your advertised value and car insurance premium will match. This means the higher your ID, the higher your car insurance premiums – as your car ages and your IDV value drops, so do your premiums.

Additionally, if you decide to sell your car, a higher IDV means you’ll get a higher price for it. Other factors such as usage and experience with car insurance claims may affect the price.

So, when choosing the right car insurance policy for your vehicle, remember to consider the IDV on offer, not just the premium.

A company offering a low price may be very attractive, but it may also have a low IDV. In case your vehicle is a total loss, higher IDV compensation is available.

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Choosing the right IDV policy to get maximum coverage is important, but at the same time, it can seem like a daunting task. Read below to find out if a car insurance policy with a higher IDV is better for you or one with a lower IDV. 

Additionally, when IDV carries a higher policy, it reduces the impact of depreciation on your compensation amount and ensures that you get compensation closer to the vehicle’s true market value in the event of theft or total loss. 

Additionally, if you want to sell your car in the future, a lower IDV policy can be beneficial as it can save you premiums while still keeping the coverage you need.

Imagine you have a cool toy car. One day you decide to find out how much you can sell to your uncle. Your uncle will scrutinize your toy, see if it’s made of plastic, metal, or rubber, and then wonder how much you’ve played with it. Accordingly, your uncle offers to buy you a car for ¥200. So in this case £200 is the IDV of your toy car. 

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This IDV amount is compensation for the current value of your toy car if it is stolen or damaged.

While the IDV value of your new vehicle will decrease, the coupon value will be the same as if you had used the vehicle.

Yes, the IDV value is directly related to the car insurance premium. Therefore, a higher IDV means a higher car insurance amount.

Look for the best IDV as a lower IDV will lead to lower claims and a higher IDV will result in higher premiums and higher premiums.

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If you’ve just started using your car, that is.

No, the IDV value is not the same as the resale value of your vehicle. IDV is not a measure of your vehicle’s resale value. The IDV of your car’s market value, resale value of your car depends on various factors such as the condition of the car and the maintenance period.

As per Indian Standard Motor Vehicle Depreciation criteria, it depends on your insurance company after fully checking the value of your fleet which is more than 5 years old.

It depends on the type and condition of your car. A high IDV is suitable for vehicles that are very old and in poor condition. Remember, the higher the IDV, the higher your annual premium.

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Sometimes, people get low rewards by posting low IDVs. However, it’s important to remember that even though your insurance premiums will be cheaper, your deductible will also be lower, which may not cover your car. Therefore, our recommendation is not to select a higher or lower IDV, but to select an appropriate IDV.

The ideal IDV for car insurance depends on the make/model of the car and its age. Therefore, the ideal IDV varies from vehicle to vehicle and is the approximate market value of the vehicle at the time of purchasing the insurance policy.

IDV on car insurance is calculated by taking into account various factors such as the make and model of the car, its age and cost after deducting depreciation. Therefore, IDV can be calculated using the formula: IDV = (Manufacturer’s Selling Price – Depreciation) + (Depreciation if accessories are included). You can use Digit’s IDV calculator.

IRDAI has fixed the depreciation rate at 5% for vehicles less than 6 months old and 15% for vehicles less than 1 year old, after which the rates increase to 20%, 30%, 40% and 50% per annum.

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