To be precise, insurance terminologies can be a little confusing. An IDV in car insurance refers to the value of your vehicle in the present market. In simple words, this is the amount of compensation your car will obtain in the current market.
It is worth mentioning here that that the IDV present in vehicle insurance assists the insurer in identifying your claim amounts properly during the payment of claims. With the help of IDV, the insurance company is able to determine the appropriate price for the insurance of your car. Note that IDV is an integral component of your car insurance. In simple words, the IDV determines the premium that you have to pay for car insurance.
The Importance of the IDV of your Car
Well, there are various reasons why IDV is an integral component of your vehicle insurance. For instance, it is the maximum compensation amount that you will receive during thefts. It is also the maximum value you would receive when the car damage is beyond repair. On the other hand, the IDV of your car insurance directly impacts the premium of your policy.
In simple words, a higher IDV results in a more significant premium and vice-versa. This is the reason why a majority of car owners opt for lowering the IDV to enjoy decreased premium rates. But as a car owner, you should always refrain from reducing the IDV of your car.
This is because, in the case of thefts and major accidents, a lower IDV could lead to a lower payout. And in challenging times, where you will be in need of money, a lower payout can be disappointing. If you want to set a proper IDV for your car, always opt for the IDV calculator. The calculator would help you choose the correct IDV for your car insurance plan.
Your IDV always Decreases with Time
It would be best if you always remembered that the value of your vehicle begins depreciating from the minute you buy it. And as we all know, if the IDV is low, the premium will also be low in value. Note that the calculation of the IDV depends on various factors. Here is the list of factors on which the IDV calculation depends.
It is worth mentioning here that the IDV and the premium of your car insurance are complementary. This implies that the greater your IDV is, the higher will be your vehicle insurance premium. However, as your car ages and IDV depreciates, the premium will also reduce. Always remember that a higher IDV is beneficial for your overall prospects.
For instance, while selling a car, you may be able to get a higher resale value with a higher IDV. That is why, when choosing the right vehicle insurance policy, consider the IDV offered by the insurance company as one of your key decision drivers.
People usually pay attention to the premium rate while choosing an insurance policy. However, considering that the IDV will be beneficial for you in the future, go for a balance between a reasonable premium amount and the IDV offered. If your vehicle is damaged severely, a higher IDV will allow you to get higher compensation.
