Knowing how the insurer values your car plays a major role in determining both premium costs and claim payouts. This is where IDV car insurance becomes important, as it represents the insurer’s assessment of your vehicle’s current market value.
Since IDV is used as the basis for settlement in cases of total loss or theft, understanding what influences it can help car owners choose more suitable coverage.
In car insurance, IDV refers to the maximum amount an insurer agrees to pay if the vehicle is stolen or damaged beyond repair. It is calculated based on the manufacturer’s listed price of the car, adjusted for depreciation. IDV does not include registration charges, road tax or insurance costs, but it may include the value of additional accessories if declared.
A correctly chosen IDV ensures that the policyholder receives a fair settlement without overpaying for the premium.
The age of the vehicle is one of the most significant factors affecting IDV. As a car gets older, its value decreases due to depreciation. Insurers follow standard depreciation slabs, which means a newer car will have a higher IDV compared to an older one.
The brand, model and variant of the car also influence IDV. Vehicles from well-known manufacturers or popular models often retain value better than discontinued or low-demand models. Higher-end variants with additional features may also carry a higher IDV.
Fuel choice influences how IDV is calculated. In certain markets, diesel vehicles tend to hold value better, whereas electric cars are valued based on aspects like battery performance, age and technological reliability.
The city or region where the vehicle is registered can impact IDV. Cars registered in metropolitan areas may have a different valuation compared to those in smaller towns, due to differences in demand, road conditions and usage patterns.
Electrical and non-electrical accessories added to the vehicle can increase the IDV if declared at the time of policy purchase. Items such as music systems, alloys wheels or additional safety equipment must be listed separately to be included in the insured value.
IDV is directly related to the insurance premium. A higher IDV results in a higher premium, while a lower IDV reduces premium costs. However, choosing an unusually low IDV may result in reduced claim payouts in the event of a total loss or theft.
Selecting an appropriate IDV is about striking a balance between affordable premiums and adequate coverage.
Car owners should avoid selecting the maximum or minimum IDV offered without first evaluating it. Reviewing the car’s actual market value, considering depreciation and factoring in accessories can help determine a realistic IDV. Comparing insurer calculations also helps in identifying fair valuation.
IDV calculations play a major role in determining the premiums and claim payouts. TATA AIG offers clear and structured IDV car insurance calculations that reflect the true value of your vehicle. With flexible IDV selection options, transparent pricing and a reliable claims process, TATA AIG helps car insurance policyholders choose coverage that aligns with both budget and protection needs.
Disclaimer: This article is published in association with TataAIG and not created by TNM Editorial.