How to Determine The Best IDV for Your Car?
Using an IDV calculator for car can give you an approximate range for which one would be the best. With different calculators showing different values, it is quite natural to be confused about which one is the best for your vehicle.
Here's the accurate formula for calculating the IDV of your car:
The total amount you paid for the car (including accessories but excluding registration and taxes) - the depreciation value of the car (depending on the year).
The insurer usually calculates the depreciation value of the car based on the year. Every car insurance company lists the depreciation value based on the car's age on its website and in its policy wording.
However, the standard depreciation value that the insurers follow includes:
1. Up to 6 months: 5%
2. 6 months to 1 year: 15%
3. 1 year to 2 years: 20%
4. 2 to 3 years: 30%
5. 3 to 4 years: 40%
6. 4 to 5 years: 50%
7. Above 5 years: Based on negotiation
While you're calculating the IDV of your car, it is important to note that this will be different from the Zero Depreciation add-on cover for your car. It is extremely important to select the correct IDV for your car to get accurate coverage while avoiding higher premiums. This is more so important for the first time car owners in India.
Remember that you can only go for IDV with your comprehensive car insurance policy and not third party insurance.
Can the IDV of a Car Be Incorrect?
Yes, in some scenarios, the car's IDV can be incorrect. While buying car insurance online, review the terms and conditions thoroughly. If the chosen value is higher than your car's resale value, you don't have to worry. This is mostly because the insurer has agreed to the value and has provided approval.
However, if you notice a discrepancy and the IDV is significantly lower than the resale value, you will have to contact your insurer immediately. You should request that they update the IDV coverage for your car insurance policy. However, for the increased valuation, you may have to pay a higher premium. In some cases, the insurer may also cancel the policy. If the current insurer cancels your policy, you'll have to buy a new insurance policy from another insurer.
What Factors Affect the IDV for a Car?
Various factors can affect the IDV of your car. These usually include:
1. Age of the vehicle:
The older the vehicle, the more its value will decrease. If you choose a lower IDV, your premium will be lower, but you will also receive a lower claim settlement amount.
2. Make, Variant, and Model:
These factors significantly impact the IDV. The same car in a higher variant is likely to have a higher IDV than the base variant.
3. Registration place:
If the road taxes are higher in a particular region, the IDV for the vehicle will be higher. The on-road prices of vehicles in metro cities are higher than those in smaller cities. Therefore, the vehicle registered in metro cities will have a higher IDV.
4. Vehicle condition:
There is no standard value for a car older than five years. The insurance companies need proof to determine the condition of your car. These insurance companies will also consider your car's claim and maintenance history to determine the IDV.
Read More: Insuring Used Cars - Key Considerations
You may use a car insurance premium calculator for your car while also calculating the IDV. This can help you get better clarity on how much premium you have to pay.
Expert Note
This information is based on standard motor insurance guidelines issued by the Insurance Regulatory and Development Authority of India (IRDAI) and commonly followed industry practices. Policy coverage and conditions may vary by insurer.
Read More: IRDAI Car Insurance Claim Settlement Ratio and Process
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