Lock in Your Car’s Right Value with Car Insurance IDV Calculator

New car owners often find the intricacies of a car insurance policy a bit daunting. One of their biggest challenges is understanding how the Insured Declared Value (IDV) of their car determines their car insurance premiums. You can ease it with a car insurance IDV calculator.

Keep reading to learn how a car’s IDV is calculated with examples, the various points an online IDV calculator considers when determining IDV and the benefits of a higher IDV, like a higher sum assured and better financial support.

Car Insurance IDV Calculator: Usage, Formula and Example

The IDV is an integral part of every car insurance policy as it impacts claim settlements, the extent of financial protection offered by the insurer and the premium payable.

Car owners often wonder how insurance companies calculate the IDV value of cars. Generally, they consider factors like car registration location, make and model, type of fuel and depreciation rate. Besides, they also use an online IDV calculator. It is an online tool for determining your car’s IDV.

Standard Formula

Generally, an IDV value calculator for cars follows the standard formula mentioned below for calculating IDV:

IDV = (Your car’s ex-showroom price + accessories cost) - depreciation value

Here,

1. Ex-Showroom Price: An online calculator considers the car manufacturer’s listed price (ex-showroom price) as the base of calculation.
2. Accessories Cost: It includes the price of car accessories like bumper guards, infotainment systems and alloy wheels, among others. However, car insurance companies also consider their depreciation value.
3. Depreciation Value: Depreciation is the reduction in a car’s value over time due to market conditions, age, wear and tear. Generally, IRDAI determines the depreciation rate.

Example of IDV Calculation:

Suppose you own a Honda car with an ex-showroom price of  ₹12,00,000 for which you need car insurance. If it is more than 5 years old, the standard depreciation applicable will be 50%.

So, IDV = ₹12,00,000 - (50% of ₹12,00,000) = ₹6,00,000

If you have added ₹10,000 worth of car accessories, the estimated value calculated by the car insurance IDV calculator will be:

IDV = (₹12,00,000 + ₹10,000) -50% depreciation = ₹6,05,000

This means that ₹6,05,000 is the maximum amount you can claim from the insurer for a stolen or damaged car.

Also Read: How is Third-Party Car Insurance Premium Estimated?

5 Factors an IDV Calculator Considers When Determining the Value

A car insurance IDV calculator considers many factors when determining your car’s value, as it reflects the approximate amount the insurer will pay if your car is badly damaged or stolen. Some of those are mentioned below:

Vehicle Age

A vital factor determining a car’s IDV is its age. The market value of a vehicle reduces over time, and so does its IDV.

For example, if you use the IDV calculator by Bajaj General Insurance to check the IDV value, you have to provide the vehicle type and number, along with your phone number and pincode. They use the vehicle number to check its registration date and age before calculating the IDV.

Location of Registration

Not every car owner knows that the city of registration also impacts your car’s IDV. This is primarily because vehicles registered and running in metro cities are more prone to accidents. On the other hand, cars in tier-2 cities generally face fewer risks and have a higher IDV.

Make and Model

Not only does your car’s age matter during IDV calculation, but so does its make and model. Most of the car insurance IDV calculators use the car’s make and model to find its current ex-showroom price. The price acts as the base during IDV calculation. The initial IDV might be higher if you own a luxury or high-end car.

Type of Fuel

Car owners should consider the type of fuel when buying a car, not only because it impacts the car’s efficiency but also its IDV. Petrol cars can achieve initial power easily, but diesel cars perform well in high gears. So, in the long run, diesel cars have a higher IDV as they are more fuel-efficient than petrol cars.

Depreciation Rate

The standard depreciation rates set by the Insurance Regulatory and Development Authority of India determine your car’s IDV, as well as claim settlements. If you are wondering, “What is the IRDAI car depreciation rate for insurance purposes?” you can take a look at the depreciation slab below:

Note: Your insurance company might apply a separate 50% depreciation on car parts like rubber items, plastic parts or nylon parts during claim settlement.

Benefits of Low IDV During Car Insurance

The demand for a car insurance IDV calculator is always quite high, as the value is generally beneficial for car owners, irrespective of whether it is high or low. If you are wondering, “How is a low IDV beneficial for car owners?”, take a look below,

Lower Premium

A lower IDV means your insurance company has to take less financial risk if your car is stolen or destroyed. This is the primary reason why the premium is lower if the IDV is lower. A lower premium means you have to pay less for your car insurance.

More Flexibility in Budget

Car owners prefer car insurance plans with a lower premium as it offers them the flexibility to use their budget for other things. You can even save the money to be used as an emergency fund for car repairs not covered under the insurance.

Benefits of High IDV During Car Insurance

Generally, car owners prefer a high IDV rating as it guarantees a larger payout or claim limit. If you are wondering, “What are the top benefits of a high IDV in your car insurance policy?” take a look below:

Higher Sum Assured

A higher IDV generally means that you have to pay a higher premium for your car insurance. This is a good financial decision, as higher premiums mean the insurance company will offer a higher sum insured. Your car will get more coverage if it ever gets stolen or destroyed.

Better Financial Support

Buying a new car as a replacement for a damaged or stolen car is always a big investment. A higher IDV means a higher sum assured. This means you will have enough money to buy a new car without becoming financially drained.

How to Use an IDV Calculator Online?

Using an online IDV calculator is quite easy. The steps you have to follow depend on the insurance company you have chosen. For example, if you plan to use the car insurance IDV calculator offered by Bajaj General Insurance, you just have to follow the easy steps mentioned below:

1. Visit the official website and sign in to your account by hovering over the top navigation menu.
2. Select the car IDV calculator option from the list of digital tools.
3. Enter some basic car details like its make, model, fuel type and variant.
4. Provide the city and year of registration.
5. Enter the car accessories (if any).
6. You can view the estimated IDV calculated by the online tool.

Also Read: How to Convert Third-Party to Comprehensive Car Insurance?

Final Thoughts

Since your car’s IDV directly impacts your insurance premiums, you can start with an online car insurance IDV calculator. The right value will ensure that you are not underinsured and your car insurance premiums are reasonable.

Trusted insurance companies like Bajaj General Insurance rely on a straightforward approach during online IDV calculation. They consider all the vital car details so you can rest assured of getting adequate compensation in case of theft or total loss.

Frequently Asked Questions

Can I increase the IDV of my car?

Yes, you can increase the IDV of your car by declaring all the car accessories (both electrical and non-electrical). Besides, you can also choose a higher value on the quote page when renewing your existing car insurance policy.

When can I claim the IDV of my car insurance policy?

You can claim the IDV of your car insurance policy if the vehicle has been stolen or damaged beyond repair. Generally, car owners claim IDV from the insurance company if the damage is more than 70-80% of the car’s current market value.

Is a higher IDV in car insurance better?

Yes, a higher IDV in car insurance is generally beneficial for car owners, as it ensures a higher sum assured in case of car theft or damage. However, a higher IDV means you have to pay a higher premium.

Can I check my car’s IDV before renewing my car insurance premium?

Yes, you can check your car’s IDV before renewing your insurance premium by using the online car insurance IDV calculator offered by the insurance company.

Is a car’s IDV and resale value the same?

No, the resale value of a car is different from its IDV. Generally, an insurance company uses the standard depreciation formula to calculate a car’s IDV. On the other hand, factors like actual market demand, buyer sentiment and vehicle condition determine its resale value.

*Standard T&C Apply. Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on several secondary sources on the internet and is subject to change. Please consult an expert before making any related decisions.