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​IDV stands for Insured Declared Value, which is the amount guaranteed by the insurance company in the event of a theft or total loss of the vehicle. The value is calculated by keeping in mind the current market value of the car and not its purchase cost.

Let's understand it with an example- Suppose your car is five years old, which means its market value will be much less than the price you purchased it at. A vehicle depreciates over time, so does it's market value. Therefore, the IDV of your car will be based off this lesser value.

Why should you purchase a car insurance policy with higher IDV?

We all know the condition of Indian roads. People violate traffic rules, driving rashly, and overtake from the wrong side to reach their destination, which makes Indian roads not a very safe place to drive. Even the numbers of car stealing cases are increasing day after day. In this condition, if you opt for a lower IDV, you are at a higher risk. Going for lower IDV will reduce your premium, but it would also result in much lesser features and benefits. It also means you won't get good claim amount when you register a claim against total damage or theft.

Does it make sense to increase your IDV?

Car insurance premiums are generally 3-4% of the insured value of the particular vehicle. Most people tend quoting a lower IDV so that their car insurance policy premium applicable is also lower. But, they don't understand that with lower IDV, they will be compensated with a lesser amount than the right market value of the car in case of theft or total damage. Eventually, lowering IDV can be a flop deal for you.

How do you establish the IDV of your car?

The IDV you decide while buying a car insurance policy majorly depends on the age of your car. The depreciation factor reduces the IDV claim every passing year, and so does its premium. Within the first six months of the new vehicle, the value of the car depreciates by 5%. If a vehicle is more than five years old, its price is determined by mutual discussion between both the parties (car owner and insurer).

IDV calculation also depends on the manufacturer's listed selling price of the brand, availability of parts of the vehicles, the car's condition, etc. The same amount is reconsidered and calculated again at the time of renewal. The policyholder doesn't need to agree with the insurance company on the premium amount decided and can debate the cost and negotiate with the insurer by researching on your own.

If you think that the insurer is not providing you with the right IDV, you have a provision of changing the insurance company and getting the real value of your car. You must keep in mind that not being aware of the right IDV of your vehicle will result in inadequate compensation. And we are sure you don't want that!

Therefore, it is advised to keep your IDV at par with the market value of the car. By doing this, you will be able to get the right claim compensation in any unfortunate case of total loss or burglary. The concept of IDV is also ​​present for two wheelers. Do ensure and set the IDV according to your need when you buy two wheeler insurance as well