As your vehicle is one of your most prized possessions, securing it with an auto insurance is a must. However, understanding various insurance terms while you buy a car insurance is important, as it can affect your claims in the future. Specially, insured declare value is a term that is of prime importance to understand as it can compensates you at the time of total loss or theft of the car. However, IDV is ridden with various myths that can deny you claims in the future. So here are few IDV myths busted for you.
In reality, you can make unlimited number of claims in a year, no matter what your IDV is. If the total value of the claim exceeds 75% of the predefined IDV of your vehicle, then the insurance company considers this as total loss of the vehicle and you will be given complete IDV of the vehicle as compensation. However, it is important for you to know that you will be liable to pay the compulsory deductible amount. Also, if he claim amount is less than 75% of the IDV of the vehicle, then you will have to bear the cost of depreciated parts and also the compulsory deductible.
The insured declared value of the vehicle is decided as per the guidelines of the Insurance Regulatory and Development Authority of India. The guidelines define the value of the depreciated parts up to 5 years of age. Insurance companies do give you an option to declare a higher or lower IDV, provided that the variation is limited for up to 10% of the actual figure. The guidelines do not mention the IDV of the depreciated parts for cars older than 5 years and is arrived based on the mutual agreement between the insurer and the policyholder.
This is not true at all. Understand all cars depreciate with age and in reality, the IDV of your car will be lower due to this factor. When calculating the market value of the car several factors such as depreciation, make and model, its performance, etc. is taken into consideration. So when you plan to sell your vehicle, don't be under the impression of getting the invoice value and instead you will get the market value that can be much lower than the actual value of the car.
This would not be a wise part on your move, if you plan to do so. IDV is the maximum amount you can claim for in case of total loss of your vehicle. Hence, if you have declared a low IDV, then you stand to get a lower amount than the actual price of the car. Remember, in the case of saving a bit on the premium, you would actually be losing out on much more.
If you declare high IDV, hoping for the claim amount to increase, then you would be wrong as IDV is the maximum claim amount possible that your insurer will provide. For instance, if you have increased your IDV to 5.25 lakh from 5 lakh, then it does not mean that the insurer will pay you that money. Hence, you may not receive more than 5 lakh for the loss.
Hence, keeping all the above circumstances in mind, you should declare your IDV carefully and also be careful if the company or your agent is not misquoting facts by declaring anti-theft device is installed when it is not.
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