A car is valuable to any owner. It is a part of their daily life and thus, holds a sentimental value. For this reason, any decision they make related to the car will include the sentimental value of it as a factor. The same should also be the case for its actual value.

When buying or renewing your motor insurance, you shouldn’t simply go for a policy with a low premium. There are more considerations to be made when buying motor insurance. If the car insurance policy premium is significantly lower than the options offered by other insurance companies, there is a big chance that the coverage offered in the policy is also lower.

Hence, it is often said to focus on the IDV while buying or renewing motor insurance.

When buying motor insurance online, you should be aware that insurers offering lower IDV, higher concessions, or significantly lower premiums without an obvious reason is likely to be a trade-off for the lack of benefits in the policy. Hence, you should understand the implications of these trade-offs thoroughly before choosing a policy.

Decreasing the insured declared value (IDV)

Insured Declared Value (IDV) is the maximum amount of money that the insurance provider will spend on your car. It is the value of money you would receive in the case of total loss/theft of your car. It is often the same as the current market value of the car. However, the value of the car depreciates over its lifetime. In response, every time you go for motor insurance renewal your policy, the insurance provider will lower the IDV. You have the option of going for a higher IDV but it will cost you more premium.The IDV is decided when you and the insurance provider mutually agree on a single amount. Each year you renew the policy, the IDV is updated as well. The insurance premium is calculated based on the IDV you and the insurance provider agree on. Usually, a lower IDV means lower premium and higher IDV means higher premium.

Most insurance companies allow you to choose an IDV within a specific pre-specified limit. This is because the IDV of your vehicle depends on both its depreciated value and its market value. So, you have the opportunity to choose a slightly lower IDV to reduce the premium you have to pay. You can do this by visiting the insurance company portal. However, it is advised not to lower your IDV just for the sake of getting a lower premium.

*Standard T&C Apply

How you will be affected

Reducing the IDV less than the market value of your vehicle means that you are insuring your vehicle for less than its value and in the event of theft or total damage, you will receive that lower IDV as compensation. This, inherently, means that you are taking some risk for the total loss and in such a case will have to bear some loss of value. For this exact reason, lower your IDV is considered a trade-off. You end up losing more money in the case of a total vehicle loss than you would save through a lower premium.

Compute your premiums instantly with the online motor insurance calculator and choose your IDV wisely. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms and conditions, please read sales brochure/policy wording carefully before concluding a sale.