Here are 3 instances where the IDV of your car insurance plan is payable. Insurer Declared Value, or IDV as it is more commonly known as, is a very important term in motor insurance. For most individuals, especially first-time insurance buyers, IDV might sound like a very complex term. However, in actuality, it is a very simple concept. IDV is nothing but the ex-showroom price of your car, minus depreciation.
Okay, but why is IDV important? One of the reasons why IDV is important is because it plays a pivotal role in deciding the premium of your car insurance policy. If you have a higher IDV, then the premium of your plan will also be higher and vice versa. Besides this, the IDV is also important because it is the maximum compensation your insurance provider will offer you in case your vehicle is damaged beyond repair. Yes! Unfortunately, there are certain unfortunate events wherein restoring your vehicle would not be possible and so your insurance provider will offer your car’s IDV as compensation. Let’s take a look at 3 of these instances. 1. Theft: This is one of the most common instances where the IDV of your car insurance policy will be payable. This is because there is no way to repair or retrieve the vehicle. Therefore, the insurance company will offer the IDV of your car as compensation. 2. Total loss: This refers to instances where the car is damaged to such an extent that it cannot be repaired. Take for example severe accidents or head-on collisions. In such cases, the insurance company provides the IDV of the vehicle as a payout to the policyholder.
3. Constructive loss: This is quite similar to a total loss. However, in this case, the vehicle can be repaired but the cost would exceed 75% of the vehicle’s IDV. Therefore, instead of covering the damages, the insurance company provides the IDV as compensation instead. Note: Total & constructive loss are not restricted to accidental damages. They can also be the result of natural & man-made calamities such as floods, earthquakes, riots, etc. If your car is damaged beyond repair due to such incidents, you will receive the IDV of your vehicle as compensation.
What if I want more than the IDV as compensation? As you might know, depreciation can take a heavy toll on the value of your vehicle. In fact, after just 4 years, the value of your car would have depreciated by 50%. To avoid the disappointment of receiving your IDV as compensation, you can opt for the ‘Return to Invoice’ add-on with your car insurance policy. This add-on will cover the gap between your car’s IDV and the on-road cost of a new vehicle. This ensures that you can be back on the road in a new set of wheels quickly and at the least possible out-of-pocket expenditure. Sure, this add-on might come at an added cost, but it will all but make up for it in case of a claim where it comes into play. We hope this article has been helpful, good luck and all the best!