Ensure the Right IDV While Buying Car Insurance for Old Car

Time to renew your car insurance? You sit down, documents spread out in front of you, and you’re hit with a wave of confusion. How much is your car actually worth now? It’s been a few years, and with all the wear and tear, you’re not sure how to value it for insurance purposes. Last year, you guessed the figure, but you have a feeling that it was inaccurate. Could you be overpaying on your premiums, or worse, under-insuring your vehicle?

Understanding Insured Declared Value (IDV) can help you navigate this situation with ease. It sets the foundation of all your insurance claim settlements and represents the current market value of your vehicle. 

Calculating the correct IDV can help you confidently renew your car insurance and protect both your car and your wallet.

What Is IDV In Car Insurance?

IDV stands for Insured Declared Value. Simply put, it is the current market value of a car according to insurance providers. 

The IDV value determines the coverage your car gets. It is the maximum amount that you can claim if your car is stolen or damaged beyond repair. The IDV ensures that both you and the insurance company have a clear understanding of your car’s worth at the time of issuing the policy.

For owners of older vehicles, calculating the IDV for old cars can be a bit tricky. As your car ages, its value decreases, which means the IDV for old cars also goes down. This is important because it directly affects your premium and the maximum amount you will receive in case of a claim. 

Calculating an accurate IDV value ensures you don’t overpay your insurance premium without compromising on coverage.

Calculating IDV In Car Insurance

Determining the IDV in car insurance is like setting the right price tag on your car for insurance purposes. The best way to do this is by starting with your car’s original showroom price — this is its value without any depreciation. 

Let’s understand the calculation of IDV with a practical example. 

Suppose you bought a car for ₹8 lakhs three years ago. Its depreciation will be calculated based on the following table:

To renew your car insurance policy, here’s how you can calculate the IDV value:

IDV value = Original showroom price – depreciation

IDV = ₹ 8 lakhs – (30% x 8 lakhs)

This brings the IDV of your car to ₹5,30,000.

If you installed additional accessories in your car, you can calculate the IDV using this formula:

IDV = (Original showroom price – depreciation) + (cost of accessories – depreciation of accessories)

But what if your car is more than 5 years old?

For cars older than 5 years, there is no fixed depreciation rate and the IDV is determined based on negotiation with the insurer, considering the car’s condition, mileage, etc. If your car is older than 5 years, you and your insurer might agree on an IDV based on a more detailed assessment rather than a straight depreciation chart.

For a quick and more accurate calculation, you can use a Car IDV calculator. All you need to do is enter the car’s details, and it will instantly calculate the IDV according to the latest depreciation rates. 

How To Ensure The Right IDV?

The right IDV balances comprehensive coverage with reasonable premiums. To ensure the right IDV value for your car insurance policy, consider the following: 

• Know Your Car’s Actual Value: Start by researching your car’s market value. Consider its age, depreciation, and any modifications. This gives you a baseline for negotiations.
• Plan a Budget for Premiums: Decide how much you’re willing to spend on insurance. Understanding your car’s value can help you allocate your budget wisely and avoid overpriced policies.
• Compare Different Insurers: Not all insurers offer the same IDV or premium rates. So, research thoroughly and look for an insurer that provides an optimal IDV without demanding a high premium.

Key Takeaways

Understanding the IDV of your old car can help you avoid unnecessarily high premiums. Use car IDV calculators and communicate with insurance providers to ensure you get the right IDV value for your vehicle. For a quick and hassle-free insurance purchase experience, consider using PhonePe and avoid paying high premiums.