IDV full form in insurance is Insured Declared Value and it is the maximum sum assured determined by the insurer in the event of theft or total loss of a vehicle. In a nutshell, IDV is the vehicle's current market worth. It is typically estimated based on the manufacturer's advertised selling price of the vehicle's model and variant (including additional accessories) at the start of the car insurance policy.
It is calculated after adjusting for depreciation each year. If your four-wheeler is stolen or severely damaged to the point where it cannot be repaired, the automobile insurance claim amount due is determined using the IDV. This is why it is critical that your car is insured for the appropriate IDV.
Only when your automobile is stolen or damaged beyond repair will you be entitled to the maximum IDV. Therefore, the higher the IDV, the larger the premium, and vice versa.
Your car's IDV is computed using the following factors:
The Insured Declared Value and your automobile insurance premium are inextricably linked. This means that the higher your IDV, the higher your auto insurance rate - and as your vehicle ages and its IDV depreciates, so does your premium. In addition, if you decide to sell your automobile, a greater IDV indicates you'll get a better price. Other criteria like usage, previous auto insurance claims experience, and so on may also influence the price.
Hence, when selecting the best car insurance policy for your vehicle, remember to consider the IDV as well as the premium. A company offering a low premium may seem appealing, but this could be due to the poor IDV on offer. In the case of total loss, a higher IDV results in larger compensation.
To accurately evaluate the worth of your vehicle, various aspects must be considered. But, if you want to estimate your vehicle's IDV on your own, you can use these two simple formulas: