How to choose IDV of your car for motor insurance?

The IDV represents the maximum sum insured amount that the insurance company will pay in case of total loss or theft of your vehicle during the policy period. Here are some steps to help you choose the appropriate IDV for your car:

• Understand the Concept of IDV: Before choosing the IDV, it’s essential to understand what it represents. The IDV is calculated based on the manufacturer’s listed selling price of the vehicle (including taxes and accessories) minus depreciation. It is the approximate market value of the vehicle at the time of insurance renewal.
• Evaluate the Market Value of Your Car: Assess the current market value of your car by considering factors such as the make, model, year of manufacture, mileage, condition, and demand for similar vehicles in the market. You can use online valuation tools, consult with automobile experts, or refer to recent sale listings to estimate the market value accurately.
• Consider Depreciation: Keep in mind that the IDV is subject to depreciation based on the age of the vehicle. As the vehicle ages, its value depreciates, and the IDV decreases accordingly. The depreciation rate varies depending on the age of the vehicle, ranging from 5% to 50%.
• Balance Between Premium and Coverage: Choose an IDV that strikes a balance between the premium amount and the coverage offered. Opting for a higher IDV will increase the premium cost but will also provide higher compensation in case of total loss or theft. Conversely, selecting a lower IDV may result in lower premium costs but may offer inadequate compensation in case of a claim.
• Assess Your Financial Situation: Consider your financial situation and the potential out-of-pocket expenses you can afford in case of a claim. Choose an IDV that aligns with your budget and provides adequate coverage without overburdening your finances.
• Future Resale Value: If you plan to sell or exchange your car in the future, consider the impact of the chosen IDV on the resale value of the vehicle. Opting for a higher IDV may fetch a higher resale value for your car, whereas a lower IDV may affect the resale value negatively.
• Consult with Insurance Provider: Seek guidance from your insurance provider or agent regarding the appropriate IDV for your car. They can offer insights into market trends, depreciation rates, and coverage options to help you make an informed decision.
• Review Policy Inclusions and Exclusions: Ensure that the chosen IDV provides adequate coverage for your car’s replacement or repair costs in case of total loss or theft. Review the policy inclusions and exclusions to understand the coverage limits and any conditions related to IDV.

By following these steps and considering various factors, you can choose an appropriate IDV for your car that provides adequate coverage and peace of mind while ensuring affordability and value for your motor insurance policy.