Buying a car may be easier when your wallet is heavy, but choosing the right car insurance might not! In case you are thinking about purchasing your dream vehicle, you have to do some more research in order to secure its future.
This discussion is about IDV in car insurance which is indeed an integral part of what you do after buying a car.
What is IDV in Car Insurance
IDV is an all-important term when we talk about car insurance. You should know about it in-depth so that your car is still valued even if something bad happens.
IDV stands for Insured Declared Value which basically indicates the amount you will get just in case the car is stolen or gets ruined entirely. The insurance provider will pay you the money so that you don’t have to pull your hair mourning your lost car. This is one of the most important backup plans to safeguard your return on investment.
It doesn’t matter exactly when you’ve bought your car. IDV shows you the current market value of the vehicle no matter the time. This means you can definitely rest assured that your money won’t entirely go in vain if something goes wrong with your car.
Your car has a specific market value, and this value is determined by the IDV in car insurance. While buying a car, you should know how this value is calculated and what you should do to get the most out of it.
When you are buying car insurance, the company decides the IDV. The amount depends on the age, maker, variant, or other factors of your car.
In a way, you will get more money if your brand-new car gets lost, and less money when your car gets old.
How to calculate IDV in car insurance
IDV is equal to the manufacturer’s registration price plus the depreciation value.
Here’s a very simple explanation of the same topic, and you don’t have to go search the internet for it ever again.
- Start with the value of your car when you purchased it. It is the original price of your car, and it matters when it comes to determining the IDV in car insurance.
- Next comes the depreciation part which might seem a little complicated to you, but it’s not. Depreciation happens when you use your car, and months and years pass by. The older your car gets, the more it tends to depreciate.
- If you have extra equipment or accessories for your car, you should add those values as well. However, these things too lose value with time.
- Then you need to calculate the IDV. You just need to substrate the depreciation value from the original price of your car and add the values of accessories if any.
- The end result is your IDV. This helps you determine how much money you’re going to get from the insurance company if something goes wrong with your vehicle.
Third party car insurance
Third party car insurance provides you the coverage for damages or liabilities stated by you if your car does some damage to someone else.
This is rather different from what you just read about IDV in car insurance. However, this one is as important as an IDV.
You need to know everything about IDV in car insurance before purchasing a car. It will save you from lots of trouble in the long run. Make sure to get the right information from the car insurance company so that there’s no confusion about it in the future.