Insured Declared Value

 Determining the Insured Declared Value (IDV) of your vehicle is crucial in gauging its market worth and understanding the maximum reimbursement in case of damage. IDV greatly influences your car insurance premium. The formula to calculate IDV is [Car's listed price - depreciation] + [Cost of extra accessories - their depreciation]. However, several factors play a pivotal role in determining IDV:

1. Car's Age: As your car ages, its IDV decreases due to depreciation and wear and tear of parts.

2. Car Model: Modern cars typically hold higher IDV due to their market desirability and advanced features.

3. Registration Location: Vehicles registered in metropolitan areas generally have higher IDV compared to smaller towns.

4. Modifications/Accessories: Added modifications or non-factory accessories contribute to the IDV.

5. Deductibles: Higher deductibles lead to a lower IDV as the policyholder shares more of the claim burden.

6. Depreciation: The IDV is influenced by the depreciation rate, which is determined based on the vehicle's age and condition:

   • < 6 months: 5%

   • 6 months but ≤ 1 year: 15%

   • 1 year but ≤ 2 years: 20%

   • 2 years but ≤ 3 years: 30%

   • 3 years but ≤ 4 years: 40%

   • 4 years but ≤ 5 years: 50%

Understanding these aspects is vital in grasping how IDV is calculated and its impact on your car's insurance coverage. These factors help evaluate the vehicle's market value and its corresponding insurance premium.