What Is The Full Form Of IDV In Insurance?
IDV Full Form in Insurance is Insured Declared Value. See, it’s essentially the maximum amount your insurance company will pay if your vehicle is completely lost or stolen. Think of IDV as the current market value of your vehicle, taking into account depreciation. Most of the time, it’s a crucial element in motor insurance policies to ensure you receive the proper compensation for your vehicle’s worth.
How IDV Is Calculated
Calculating IDV isn’t complicated, but it’s very important. It begins with the manufacturer’s listed selling price of your vehicle. Then, depreciation is applied based on your vehicle’s age. For example, a car under six months old might lose about 5% of its value, while one that’s between one and two years old could depreciate by 20%. And yes, if you’ve added any extras that didn’t come from the factory, you can include them in the IDV calculation by adding their cost minus depreciation.
How IDV Affects Your Insurance Premium
Sure, a higher IDV means a higher premium because it increases the potential payout by the insurer. As your vehicle ages and its IDV decreases, your insurance premium will also drop, and that too significantly. It’s important to declare the IDV accurately. If you set it too low to save on premiums, you might end up undercompensated if something happens.