IDV Full Form:- The term bike insurance can be a bit confusing, especially for a first-time buyer. There are several terms that need to be known in order to understand how a scheme works. One of these terms is IDV. This is probably one of the most important things in bike insurance – it can affect your premiums and also your claim experience. What is IDV? How does this work? Why is IDV so important in IDV? How is IDV calculated? We are sure you have all these questions and more! Hence we have put together this quick study which will give you a complete understanding of IDV in bike insurance.
IDV refers to the Insured Declared Value and is the maximum sum assured decided by the insurer that is offered in case of theft or total loss of the vehicle. In short, IDV is the current market value of your vehicle. This is usually estimated by the manufacturer based on the listed selling price of the model and variant of the vehicle (including additional accessories) at the inception of the car insurance policy. This is determined after adjusting depreciation for each year. In case your four-wheeler is stolen or badly damaged to such an extent that it is beyond repair, the car insurance claim amount payable is calculated on the basis of IDV. Hence it is very important that your vehicle is insured for the correct IDV. For the said purpose one should make use of a car insurance calculator.
Why is The IDV of My Car Important?
There are 2 main reasons why the IDV of your car is required. Firstly, it is the maximum amount of compensation that you will receive in case of theft or if your car is damaged beyond repair. Second, the IDV of your car directly affects the premium of your insurance policy. A higher IDV results in a higher premium and vice versa.
With this knowledge, many car owners think of lowering their IDV to enjoy lower premiums. However, you should note that, in case of theft or total loss of your vehicle, a lower IDV can also lead to a lower payout. This can be very frustrating. Hence it is important that you use the IDV calculator and set the correct IDV for your vehicle while buying or renewing your car insurance policy.
Online IDV Calculator:
As the name suggests, an online IDV calculator helps you get an almost accurate estimate of the IDV of your vehicle. To use this tool, all you need to do is get on the internet, visit our car insurance page and enter a few details about your vehicle. Based on the information provided by you, we will tell you the ideal IDV for your vehicle. You can even edit the IDV as you like.
How is The IDV of Your Vehicle Calculated: IDV Full Form
Our Insurance cum IDV Calculator uses an advanced algorithm to check the IDV of your car. There are many factors involved in calculating the exact value of your vehicle. However, if you want to estimate the IDV of your vehicle yourself, you can use these 2 simple formulas:
If you don’t have any spare items:
IDV of your car = Ex-showroom price of the car – Depreciation.
If you have added accessories:
IDV of your car = (Ex-showroom price of car – Depreciation) + (Price of accessories – Depreciation of accessories)
How is The Cost of Depreciation Calculated?
The rate of depreciation plays an important role while calculating your IDV. The value of your vehicle depreciates slightly every year. This annual reduction in the valuation of the vehicle is known as depreciation. The rate of depreciation has been standardized and prescribed by the Motor Tariff Act – it is as follows:
So, if your car is less than 6 months old, the IDV of your vehicle will be around 95% of its ex-showroom value. Once your car has completed 6 months, its IDV will be around 85% of the ex-showroom price. Similarly, the estimated IDV would be 80% of the ex-showroom price for a vehicle which is between 1 and 2 years old – and so on! However, once your vehicle crosses the 5-year mark, the insurance company and the policyholder have to mutually agree on the IDV. If you want to check the IDV of your car, you can use our online IDV calculator instead of racking your brain with this mental calculation.
5 Factors Affecting the IDV of Your Vehicle
The IDV of your vehicle is decided on the basis of several factors, some of which include:
Car Type: There are different types of cars available in the market. These include hatchbacks, sedans, SUVs, MUVs etc. Each of these types of cars will have a different value. For example, SUVs cost more than sedans. Similarly, sedans usually have a higher value than hatchbacks. Hence, the type of car is one of the first factors affecting the IDV of your car.
Make and Model: Make and model also play an important role in determining the IDV of your vehicle. This is because different car brands have different values, even if they are the same type of car (i.e. hatchback, sedan, etc.).
Age and Depreciation: This is one of the most important factors while calculating the IDV of your vehicle. Your car’s depreciation starts as soon as it gets home from the dealership. And, the older it gets, the more its value depreciates. Therefore, an old car will have a lower IDV as compared to a new car, irrespective of the make, make and model of the car.
Place of Registration: The place where your car is registered also plays a minor role in deciding its IDV. This is because the ex-showroom price varies from city to city.
Accessories: Lastly, if you have added any accessories to your car, their depreciation cost can also be included while calculating the IDV of your vehicle.
What Happens If I Choose a Lower IDV: IDV Full Form
Our car insurance calculator also doubles up as an online IDV calculator. Using this you can quickly check the price of your car. In addition, our calculator also allows you to edit the IDV as per your choice. You can reduce the IDV of your car in the given quotation. However, this will have a direct impact on the premium of your plan. Changing the IDV will also affect the payout of your policy in case of theft/total loss of your vehicle.
Let’s Take a Look at What Happens if You Lower The IDV of Your Car
- The premium of your policy will decrease
- This will help you save money on your car insurance policy
- However, the sum assured of your policy will be reduced
- Hence, you will get lesser compensation in case of a total loss
What Happens If I Choose a Higher IDV?
Our online IDV calculator also allows you to increase the IDV of your car. You can choose a higher IDV in your quotation and enjoy the benefits that come with it. Let us see what happens if you increase the IDV of your car.
The sum assured of your policy will increase:
- This higher sum insured can be extremely helpful in case of total loss
- However, the premium of your car insurance policy also increases.
When is IDV Due: IDV Full Form
Claims that involve the IDV of your vehicle are very rare. However, it is still important to determine the correct IDV when you buy and renew a car insurance policy. This will ensure that your premiums are in check along with the appraisal of your car. But more importantly, it will ensure that, if your IDV is required to calculate the claim amount, you will receive fair and satisfactory compensation. Here are some examples where the IDV of your vehicle is due:
Theft of Vehicle: This is one of the most common claims where the IDV of the car is payable. Theft is considered a total loss and hence the insurance company has to provide the Current Market Value (IDV) to the insured. This compensation will help offset the financial impact of the stolen vehicle.
Total loss of the vehicle: Another type of claim where the IDV of the vehicle is payable when the cost of repairs exceeds its insured value. Such damage may be the result of an accident, IDV Full Form an act of God such as an earthquake, or a man-made disaster such as a riot. Here the insurance company will provide the IDV of the vehicle to the policyholder. This will help in reducing his contribution towards the purchase of a new vehicle.
FAQs on IDV Full Form
Is it good to increase IDV value?
Similarly, if you quote a lower IDV for your car, you will have to pay a lower premium and eventually the claim amount will also be lower. Hence, it is advisable to choose an insured declared value which is neither too high nor too low, but equal to the market value of the car.
How is IDV calculated?
The simple formula to calculate IDV is:
- IDV = Manufacturer’s Registered Value – Depreciation.
- Insured Declared Value = (Listed Value of the Company – Depreciation Value) + (Cost of Vehicle Accessories – Depreciation Value of Accessories).
How much IDV should I take?
For the first six months of car purchase, most motor insurers charge only 5% depreciation on the invoice value of the car. Hence, the IDV of a car outside the showroom will be the ex-showroom price of the car minus 5% depreciation i.e. 95% of the invoice price of the car.
What is the advantage of IDV?
Financial compensation in case of vehicle theft:
Plus, if you have an open parking space, the chances of theft increase even more. A high IDV can also help you in case the car or bike is stolen. With the claim amount that you receive from your insurance company, you can plan for the purchase of a replacement vehicle.
Who decides the IDV value?
In short, IDV is the current market value of your vehicle. This is usually estimated by the manufacturer based on the listed selling price of the model and variant of the vehicle (including additional accessories) at the inception of the car insurance policy. This is determined after adjusting depreciation for each year.
What is the maximum IDV?
The term ‘IDV’ refers to the maximum claim that your insurer will pay if your vehicle is damaged beyond repair or stolen.
What happens when IDV is low?
Going for a lower IDV will reduce your premium, but will also result in fewer features and benefits. It also means that you will not get a good claim amount when you file a claim against total loss or theft.