Insured Declared Value is the heart of your beloved car insurance. It is the sum insured for the purpose of your Car Insurance Policy and is considered at the commencement of each policy period for the insured vehicle. IDV has been decided on the basis of the manufacturer’s listed price of a particular vehicle and adjusting the current selling price of the vehicle with depreciation percentage as prescribed in the Tariff. However, insureds feel heartbroken when they come to know the actual losses to their car is exceeding their sum insured.
This is the amount under which insurer indemnify your damage or loss. This IDV is decided by the following factors:
a. Manufacturer’s listed price of a particular vehicle with its accessories.
b. Depreciation percentage depending on the age of the vehicle.
This depreciation percentage will be provided by the Manufacturer. If the vehicle is less than 6 months old then its depreciation on the selling price will be 5%. Moreover, if the car is more than 6 month but less than 1 year old its depreciation stands at 15%. It gets increased with increasing age of the vehicle.
Always keep in mind this is the maximum amount on which insurer is liable to compensate the expenses on the event of losses or any harm to your beloved vehicle. The IDV so fixed shall be treated as the net Market Value throughout the period of the policy for the purpose of Total Loss/Constructive Total Loss (CTL) claims.
Constructive Total Loss is a term used when the retrieval cost of the damaged vehicle exceeds 75% or more than the current value of the car. It can also refer to an insurance claim that is settled for the entire amount of asset/property/vehicle on the basis that the cost to repair or recover the damaged asset exceeds its replacement cost or market value.
Total Loss mode is generally adopted when the IDV of the vehicle is less than its market value and liability of insurers on total loss basis is in the interest of insurers. In such cases, if IDV less salvage value is lower than the repair liability such mode may be adopted.
It is highly advisable that potential buyers should understand the entire concept of CTL and the each and every clause mentioned in CTL terms and conditions.