What is an IDV in Motor Insurance?
Idv or insured declared value is the maximum sum assured of your vehicle which is agreed by the insurer and paid in the event of accidental damage, theft or total loss of the vehicle.Idv is basically the current market value of the vehicle. It is the maximum amount of coverage that the insured can claim during the year in the event of total loss or constructive total loss, accidental damage or theft.
For instance: if the idv of the vehicle is fixed at 10 lakhs at the start of the policy, then the maximum amount compensated by the insurance company will be rs. 10 lakhs.
Calculating the insured declared value:
In order to arrive at theidv, it is calculated on the basis of below parameters:
- Car registration details
- City in which you are residing
- First purchase or registration date
- Current registration type - individual or company owned
- Manufacturer,make and model of the vehicle
- Cubic capacity
- Ex-showroom price of the vehicle.
As per irda (insurance regulatory and development Authority) the maximum idv (insured declared value) for a new car can be 95% of its ex-showroom price. As the vehicle goes old the idv goes down.It is calculated by adjusting the current manufacturer's listed selling price of the vehicle with depreciation percentage listed in the table below:
| Vehicle |
% of depreciation
|
| Not exceeding 6 months |
5%
|
| Exceeding 6 months but not exceeding 1 year |
15%
|
| Exceeding 1 year but not exceeding 2 years |
20%
|
| Exceeding 2 years but not exceeding 3 years |
30%
|
| Exceeding 3 years but not exceeding 4 years |
40%
|
| Exceeding 4 years but not exceeding 5 years |
50%
|
For vehicles that are obsolete and aged over 5 years, the idv will be the value agreed between theiNsurer and the customer. Here, instead of calculating on the basis of the depreciation %, it is calculated through assessment of the vehicle's conditions.
Idv = (manufacturer's listed selling price - depreciation) + (accessories that are not included in listed selling price - depreciation) and excluding registration and insurance costs.
Manufacturers listed selling price = cost price + local duties / taxes, excluding the registrationand insurance.
Total loss/ constructive total loss:
The schedule of age-wise depreciation, as shown above, is applicable for the purpose of total loss/ constructive total loss (tl/ ctl) claims only. A vehicle will be considered to be a ctl, where the aggregate cost of retrieval and / or repair of the vehicle subject to terms and conditions of the policy exceed 75% of the idv.
Importance of idv:
While buying a car insurance, it would be advisable to check the idv with your insurance company. There are few would ask you to choose for a lower idv as it reduces the premium, however,we need to keep a note that claim depends on the idv, it is influenced heavily by the type of loss.
