When it comes to car insurance, there is a term that holds the key to your peace of mind: increased market shares, insured declared value (IDV). But first, what is IDV, and how is it important to you? Now let us get into the details of the idea that can either enhance or destruct your car insurance experience.
What is Insured Declared Value (IDV)?
Here is what we came up with: IDV is the ‘actual’ value of your car as far as your insurer is concerned at any given moment. This is the highest amount of money that your insurance firm will provide to you in the event of car theft or total loss of your car. This is not what you actually bid for the car but the current market price of the car taking into account depreciation.
Why does IDV matter?
1. The Foundation of Your Claim: IDV is the cost under which your car insurance policy will begin and will continue to increase as the car depreciates. In cases of complete write-off or theft of your car, the agreed IDV is the amount that the insurance company will offer to you. If this is set too low, then you will find that you had inadequate coverage, whereas if the deductible is set too high, then you will find that you paid a lot of money in premium for nothing much in return.
2. Balancing Act Between Coverage and Premium: It has a direct relationship with your insurance premium for the car that you own. The higher the IDV, the higher the premium paid, but in the unfortunate event of making a claim, the higher the amount that will be settled. On the other hand, a lower IDV could cost you less to pay for your premiums but may not provide you enough payoff once you most require it.
How is IDV determined?
As we have seen, IDV is not an absolute figure. It is based on the manufacturer’s list selling price of the car and depreciation in accordance to the use of the car and the age of the car. In general, for newer models of cars, or cars that have not suffered so much from wear and tear, the IDV will be relatively higher than for older models of cars which will have depreciated significantly. For instance, after one year, car might lose up to 15-20% of its realized value meaning that IDV would be different from the initial price.
Getting the Most Out of Your IDV
- Avoid Under-Insuring: You may be thinking of just choosing a lower IDV so that you pay less for your premiums but this will only prove costly should you have an accident. Make certain that IDV gives a genuine estimate of the market price of the car you own.
- Annual Review: The market value of your car reduces gradually, hence the necessity to review the IDV annually when rebuying your policy. This ensures that you remain covered in proportion with the value of your car.
- Consider the Bigger Picture: As for IDV, you see, it affects your premium rate but it is only one of the many factors that make up your car insurance policy. Also look at other aspects such as coverage benefits additional to what is required, add-ons, and the claim settlement record of the insurer.
Conclusion
Insured Declared Value is the heart as well as the soul of the car insurance policy that you buy. The key to achieving an ideal level of insurance is to control your IDV, interrelated with fairly reasonable premiums. The IDV is not something that you create and then leave untouched indefinitely; it is a dynamic value that must correspond to changes in your car’s age or deterioration if necessary . And no person would want an IDV that provides him or her and the car with astronomical expenses that are absolutely out of the ordinary to incur.