What is IDV in Car Insurance and How Does it Work?
IDV calculators that can help you estimate the depreciation rate for your car. IDV add-ons can be valuable if your priority is to maximise coverage. For instance, zero depreciation insurance may increase the IDV to reflect the car's original purchase price.
However, this is done after subtracting a minimal depreciation amount. It is important to note that these add-ons typically come at an additional premium. IDV holds immense importance in car insurance for several reasons: In the event of your car being stolen or damaged, the IDV dictates the highest payout you can receive.
A higher IDV translates to a potentially larger claim amount. Here, IDV acts as a financial safety net that secures you if your car suffers a major loss. IDV directly impacts your car insurance premium.
A higher IDV signifies a greater risk for the insurer, as they are liable for a potentially larger payout in case of a claim. This often leads to a higher premium. Conversely, a lower IDV may result in a lower premium, but also a potentially lower payout in case of a claim.
Striking the right balance between IDV and premium is crucial. This ensures you get adequate coverage without breaking the bank. Selecting the appropriate IDV offers several advantages: An IDV that accurately reflects your car's current market value ensures you receive adequate compensation in case of a claim.
If your well-maintained car with a high IDV is stolen, you'll receive a payout closer to the car's current value. This can help minimise your financial burden. Choosing the right IDV helps you avoid paying an inflated premium for excessive coverage or being underinsured in case of a claim.
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