What is insured declared value

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Subscribe to Mint Newsletters. Internet Not Available. Wait for it… Log in to our website to save your bookmarks. It is the monetary value of a product and the owner of that product declares the IDV. In the case of car insurance, the IDV of your car is the Sum Assured amount when you raise a claim during the policy period against your car insurance. In other words, it is the approx.

Based on this value, your insurance provider will decide your claim amount. This also helps in determining the premium rate for your vehicle. Rahul plants an apple tree. He lives in a flood-prone area and fears that the tree might get uprooted.

He visits an insurance company for an insurance policy for the apple tree. Now he needs to declare the worth of the apple tree. He quickly calculates that each year the tree bears around apples, and each would cost approx. Thus, he declares the IDV as Rs. In case the tree gets destroyed in floods, the insurance company will pay him approx. In this example, understand that Rs. It is the Insured Declared Value declared by the owner.

IDV is the approximate market value of the car. It is the maximum amount you can get i. IDV changes every year due to depreciation. You will be liable to get the highest value of IDV only when your car gets stolen or in case of damage beyond repair.

Also, the higher the IDV, the higher the premium amount and vice-a-versa. Thus, it also helps in calculating the payable premium while buying a car insurance policy. The insurance company in this case ACKO will calculate this amount at the time of claim settlement.

Then we would adjust this value for depreciation. Every car depreciates in time. The age of the vehicle, wear and tear influence the depreciation of the car.

The depreciation of your car starts as soon as you drive your car out of the car showroom. All car owners should be aware of the rate of depreciation for fixing the IDV. The registration and the insurance cost are not included in the IDV value. The cost of car accessories not fitted by the manufacturer is also calculated separately if insurance is required for accessories. Note: For vehicles more than 5 years old, depreciation is not considered while fixing the IDV.

The insurer e. Post the assessment, both the insurer and the policyholder will have to mutually agree on the IDV. Below is the formula to calculate IDV in car insurance. The Insured Declared Value is one of the primary factors which influences the car insurance premium amount.

Here are some points to remember while calculating it in car insurance. Do not reduce the IDV so that the premium is lower. This will reduce your claim amount in case of any losses incurred. Do not provide an inaccurate IDV as this could lead to a possible decline of your claim.

The IDV value is dependent on a few factors related to your car. Here is a list of those factors. The value of a car depends upon its type. A hatchback car is usually cheaper as compared to sedans or SUVs. Thus, the IDV would vary accordingly. Various car models of the same type, say a sedan, can have different IDVs. This depends upon the brand i. There is a slight difference in the cost of a car depending upon the location of purchase. For example, the ex-showroom price of the same model can be different in Mumbai and Delhi.

Depreciation is a reduction in the monetary value of a car due to age. The older the car, the more depreciation. For example, two cars of the same model will have different IDVs because they were manufactured in different years.

Depreciation on accessories is also calculated while determining the amount of IDV. Thus, its value will change depending on the age and working condition of additional accessories.

One does not need to declare the IDV while buying a Third-party policy, as the car is not insured for damages. Third-party insurance is for other people or third-party property. If you adjust the offered IDV amount while buying the policy, you will notice that the premium will also increase or decrease. If you increase the IDV, your premium will also increase. Likewise, if you decrease the IDV, the premium will also decrease.

IDV is directly proportional to the premium of your car insurance policy. If you decrease the IDV, your premium will also decrease. You save money when you pay less for buying the insurance policy. The sum insured will reduce. This is because different car brands have different values, even if they are the same types of car i. Your car starts to depreciate as soon as you drive it home from the dealership. And, the older it gets, the more it depreciates in value. Therefore, an older car will have a lower IDV as compared to a new one, even if it is the same type, make and model of car.

Place of registration: The location where your car is registered also plays a minor role in deciding its IDV. This is because the ex-showroom price varies between cities. Accessories: Lastly, if you have added any accessories to your car, then their depreciated cost can also be included when calculating the IDV of your vehicle. All it takes is a few details and a couple of seconds of your time— you will have the IDV of your car on your screen.

Our car insurance calculator also doubles-up as an online IDV calculator. By using it, you can quickly check the value of your car. Moreover, our calculator also allows you to edit the IDV as per your preference. You can lower the IDV of your car in the quotation provided.

However, this will have a direct effect on the premium of your plan. You can choose a higher IDV in your quotation and enjoy the benefits the come with it. Claims that involve the IDV of your vehicle are quite rare. However, it is still important to set the right IDV when you buy and renew a car insurance policy.

This will ensure that your premiums are in-check with the valuation of your car. Theft is considered a total loss and therefore 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: The other kind of claim where the IDV of the vehicle is payable is when the repair cost exceeds its insured value.

Such damage could be a result of an accident, an act of God such as earthquakes or a man-made calamity such as riots. Here, the insurance company will provide the policyholder with the IDV of the vehicle. The IDV of a new car can be estimated as its ex-showroom price minus the depreciation cost of the vehicle.

It doubles up as an online IDV calculator by providing a quotation wherein the IDV is indicated and can be increased or decreased as per requirement. Yes, you can opt for the return to invoice or new vehicle replacement add-on. Whether it is a commercial or private vehicle does not really matter. Download Our App:.