[shadkhan]

Thanks for the replies everyone..

Originally Posted by D'Ro@dSt@r

I have always made a point not to reduce the IDV during each renewal event hough I had RTI add on till on my 2020 creta. I feel if you keep on reducing the IDV on each renewal, once you cross the 4/5 yr mark and you don not have the option to have the RTI as an add-on, your car's value will be much lesser (~40% of the showroom value). While resale it may not impact, but in case of an unforeseen event, you will have to bear a big loss just coz you saved a couple of thousands while renewing.

I have not planned to reduce IDV every year.
However, regardless of me reducing IDV every year or not, at 5 years, the car's IDV will be 50% and I will have to bear the big loss anyways.
https://img.etimg.com/photo/msid-56116958/.jpg

Originally Posted by libranof1987

It is not just theft/total loss that the IDV comes into picture. If you have a claim, they will approve it only as long as it is <75% of IDV. If it is beyond that, they'd recommend a total loss on the vehicle.

75% of my reduced IDV(15lakh) would be 11Lakh+. I don't see a normal claim. or even 5 claims in a year, go this high. But please share if you disagree.

Originally Posted by ghodlur

I would not suggest lowering the IDV just to save on the premium. It is unfair to underinsure your car, there is a specific reason why the depreciation table for the IDV is mentioned in the Policy document.

Also RTI add on cover does have its own Terms and conditions which must be read to understand the applicability. The cover is generally available for the first three years of ownership at sole discretion of the Insurance co. Once the cover is unavailable and the IDV is already depreciated more than the table, it will be very difficult to justify any increase in IDV which will come at a higher premium then. So it is suggested to calculate the IDV either by the table or by thumb rule of 10% less than previous year IDV.

I have shared the table above. I get your point and will look into Terms and Conditions for RTI. Thanks

[anay3000]

Right before Covid hit us, i.e. in Jan 2020, I was trying to buy a friend's i10 Grand . I was going to finance it, however, his car's reduced IDV caused umpteen issues.
Bank was ready to finance till 75% of IDV, while he expected quite more than the IDV.

Car was from Oct 2018, and the owner expected 6L. The IDV was 4.5, and my bank was ready to provide a loan of 3.4L. I couldn't afford to pay 2.6L in cash, and thus lost out on owning a great car.

Consider that in case there is a possibility that you may sell your car.

[itsbaman]

I always keep my IDV high. It matters when repair charges are high and insurer may declare your car at total loss if repair cost is more than 75% of your IDV.
I saved my ecosport because of it.

[alphahere]

Originally Posted by shadkhan

Is there something else I should be worried about?
I want no hassles in claims.

It would be wise to think about all aspects including the damage payouts during claims. Apologies if this has been mentioned earlier but here goes anyway. There is a concept in claims that is used to penalise understatement of insured value even in the case of non total loss. If the IDV has been understated by 25%, the damage payout can also be reduced by the same amount. If the damage repair bill comes to 1 Lakh, the insurer may pay out only 75k. I am not aware if this concept is used by any insurer yet but there is a possibility that this can be implemented, I do not believe there are any rules in effect to prevent them doing this. Just something to bear in mind for the future.

[shadkhan]

Originally Posted by alphahere

It would be wise to think about all aspects including the damage payouts during claims. Apologies if this has been mentioned earlier but here goes anyway. There is a concept in claims that is used to penalise understatement of insured value even in the case of non total loss. If the IDV has been understated by 25%, the damage payout can also be reduced by the same amount. If the damage repair bill comes to 1 Lakh, the insurer may pay out only 75k. I am not aware if this concept is used by any insurer yet but there is a possibility that this can be implemented, I do not believe there are any rules in effect to prevent them doing this. Just something to bear in mind for the future.

Haven't heard this rule before. Do you have any source/references?

[s-k1]

In my opinion, there is no issue with reducing the IDV while purchasing a insurance as long as you are fine with getting a reduced payout when your vehicle gets totalled/stolen. Buying insurance is all about probabilities and you can take calculated risks for the asset you are trying to insure. If the chances of a car meeting with an accident is x, then for my particular case I can easily say that the chances of my car getting totalled is 0.01 x. Therefore, I always reduce the IDV to a reasonable value if that results in a good savings in the premium. I read some people say here that once you reduce the IDV, you will always have to keep reducing it during renewal based on that reduced IDV and dep %. Its not true, I have sometimes kept the IDV the same between 2 insurance renewals, and sometimes increased the IDV even, when I realized that increasing the IDV was not causing much impact on the premium for that particular insurer. Having said that, I always paid a much higher premium to buy zero dep addon (last year I paid 3x the normal own damage premium for my 7 year old Jazz) whenever possible. This is because, I calculate that WHEN an accident (even a minor one) does happen to my car, then most likely I may incur something like 35-50K repair costs and almost the entire amount can be claimed with zero dep. And in my opinion, these kind of accidents happen with much higher probabilities than a car getting Totalled (I drive 99% of the time inside the city with this car), so its worth paying extra for taking care of this type of accidents. After all you are buying an insurance to have a complete peace of mind when an accident does happen. And remember that, if you are a very careful driver you can most certainly avoid accidents that can total your car, but you can never say that for the regular minor accidents that happen in city traffic due to other's reckless driving.

[BeMyWings]

Originally Posted by shadkhan

Haven't heard this rule before. Do you have any source/references?

This concept is called under-insurance. This is when policy holders intentionally undervalue their property (car, apartment, etc..) to save premium. So what insurers do is deduct an amount from your claim amount based on the fair market valuation on the date of the accident/loss.

But as Sk1 mentioned, it does is it affects the total claim payment (in case you have a claim)

[shadkhan]

Originally Posted by s-k1

In my opinion, there is no issue with reducing the IDV while purchasing a insurance as long as you are fine with getting a reduced payout when your vehicle gets totalled/stolen. Buying insurance is all about probabilities and you can take calculated risks for the asset you are trying to insure. If the chances of a car meeting with an accident is x, then for my particular case I can easily say that the chances of my car getting totalled is 0.01 x. Therefore, I always reduce the IDV to a reasonable value if that results in a good savings in the premium. I read some people say here that once you reduce the IDV, you will always have to keep reducing it during renewal based on that reduced IDV and dep %. Its not true, I have sometimes kept the IDV the same between 2 insurance renewals, and sometimes increased the IDV even, when I realized that increasing the IDV was not causing much impact on the premium for that particular insurer. Having said that, I always paid a much higher premium to buy zero dep addon (last year I paid 3x the normal own damage premium for my 7 year old Jazz) whenever possible. This is because, I calculate that WHEN an accident (even a minor one) does happen to my car, then most likely I may incur something like 35-50K repair costs and almost the entire amount can be claimed with zero dep. And in my opinion, these kind of accidents happen with much higher probabilities than a car getting Totalled (I drive 99% of the time inside the city with this car), so its worth paying extra for taking care of this type of accidents. After all you are buying an insurance to have a complete peace of mind when an accident does happen. And remember that, if you are a very careful driver you can most certainly avoid accidents that can total your car, but you can never say that for the regular minor accidents that happen in city traffic due to other's reckless driving.

Thanks for sharing your experience. I was wondering as to why I was the only one thinking this through. The chances of total loss is too less and if someone can save 20-30% of the premium by reducing IDV to a reasonable amount, then why not..

Did you face any issues/extra amount deduction while claiming for normal repairs just because you had lower IDV?
Also, do you have experience with RTI (Return to Invoice) and how does lower IDV impact it?

[s-k1]

Originally Posted by shadkhan

Thanks for sharing your experience. I was wondering as to why I was the only one thinking this through. The chances of total loss is too less and if someone can save 20-30% of the premium by reducing IDV to a reasonable amount, then why not..

Did you face any issues/extra amount deduction while claiming for normal repairs just because you had lower IDV?
Also, do you have experience with RTI (Return to Invoice) and how does lower IDV impact it?

I haven't made any claims so far with reduced IDV, but I don't expect to have face any issues. Insurance is a clear and transparent contract between 2 parties and any reduction should be clearly communicated upfront at the time of purchase by the insurance company. And any reductions in claim amounts are articulated clearly in terms of voluntary deductibles, depreciation, copay etc. Nowhere I have seen a claim reduction term mentioned in any insurance policy based on the IDV of the vehicle.

[silverado]

How much will you save by reducing IDV? Compare that to the amount you stand to lose in situation where IDV comes in picture.

Dont think of insurance as wasted money, it is something to back you in case of that unfortunate incident/theft.

Absolutely NOT WORTH IT to reduce IDV IMO.

[ruskinash]

Originally Posted by dhanushs

You are allowed to, but, I would strongly recommend against it. After this step down, you will further face yearly depreciations on the IDV and even if you want to bring it up someday, it can never go up.

This is incorrect. You can increase your IDV. I have done this personally. Depends on the insurer.

[Nilesh5417]

Going above the idv calculated using IRDA guidelines is no use cause your claim for insurance will be honored only upto IRDA idv. One is paying premium unnecessarily unless one is trying to sell the vehicle and is trying to make a case for the price he expects. Most buyers who are aware of how insurance works see through this anyway.

Going below the IRDA IDV is allowed but it's a risk you take. Worth it if your car is pretty old and the market value of your car is anyway lower than the IDV. Which means even if you sell the car today, no one is willing to buy it at the true IDV price and in case of any unfortunate accident, fixing the car is a bigger pain / more expensive than writing it off. But in most other cases, it's best to insure atleast upto the IDV value.

[BeMyWings]

Originally Posted by ruskinash

This is incorrect. You can increase your IDV. I have done this personally. Depends on the insurer.

In this case, both are correct. Yes, you can increase your IDV. However, if you've decreased it in the past, the decreased IDV now becomes the base IDV for the new year.

I've provided a couple of examples of my i20 for reference:

Current IDV:
Min:450,000
Max:575,000

Scenario 1 (I pick the maximum IDV possible) -
On renewal, my new IDV will most likely be depreciated by 20% (Depreciation is a reduction in the value of an asset. This is an example).
New IDV on renewal in 2026 will be in the range of 380,00 to 450,000.

Scenario 2 (I pick the minimum IDV possible)
Same as above, however, now my new IDV on renewal in 2026 will be in the range of 275,00 to 380,000.

Claim payouts will be paid out in proportion to the IDV.

Now does this mean you must get the maximum IDV + zero dep always? Nope, most certainly not. Beyond a point, it stops making economic sense. It depends on the car, the driver and their usage.

Long story short, picking an IDV, maintaining no claim bonus and various other factors are dependent on the risk you face. If you do not face a significant risk (occasional highway commutes, very few accidents, etc.) then it might be worth considering your options and buying the appropriate coverage you need vs the coverage that you are being sold.

[s-k1]

I disagree with BeMyWings on both the renewal IDV calculation part as well as claim payouts part that he has mentioned. In my opinion, both are incorrect. Take my Honda Jazz CVT 2016 for example:
1. In 2020, I renewed my car insurance with Digit for an IDV of Rs 3,65,000.
1. In 2021, I renewed my car insurance with Digit for an IDV of Rs 3,30,000.
1. In 2022, I renewed my car insurance with Acko for an IDV of Rs 2,60,560.
2. In 2023, I renewed my car insurance with Acko for an IDV of Rs Rs 2,50,651.
3. In 2024, I renewed my car insurance with Tata AIG for an IDV of Rs 3,00,536. Maximum IDV allowed was upto 3.35 Lakhs or so. Note that, even though I renewed with Tata this time, even Acko was allowing upto to chose IDV upto Rs 3L

As you can see above, from 2022 to 2024, I changed the IDV from 2.5L to 3L. I believe, this was possible because when you renew your policy, insurers do not take into account what was the IDV in your previous policy. They will only consider the purchase value of the car and how long back it was purchased to calculate the car depreciation (and possibly how many claims you would have made in between, but this am not sure). But It really depends on the insurer on how much max IDV they will let you chose and almost always I have seen that they let you chose equal or more than your current IDV if you had chosen a lower IDV in your last renewal. For example, my mother's car purchased in Jan 2023 has a current IDV of Rs 10,40,185 and Acko is letting me chose an IDV of Rs 11.06 Lakhs for the next renewal

Coming to claims, BeMyWings states that "Claim payouts will be paid out in proportion to the IDV". In my opinion, this is a completely incorrect statement. If yor check the terms in your insurance policy, they will clearly give you a table for how much deduction will apply on the claims based on the yearly depreciation of the car. No where they state that the "claim payouts will be in proportion to the IDV". Now, if you purchase a zero depreciation add-on (which I have purchased when I renewed with Tata AIG this time), then they are bound by the contract to pay the full claims without deducting any amount for depreciation as long as the repair charges are less than the IDV of the car.

I found the following article very useful and it completely explains the IDV concept when buying the car insurance. In particular, check the section titled: "What Happens in Case You Decrease Your Car’s IDV?:
https://www.smcinsurance.com/motor-i...-car-insurance

[BeMyWings]

Originally Posted by s-k1

I disagree with BeMyWings on both the renewal IDV calculation part as well as claim payouts part that he has mentioned. [/b].
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You are free to disagree, but I won't make this personal. I can, as you did, take apart every single thing you said, but I won't.

You have your opinion, I have mine. I won't be commenting on this subject anymore because this thread isn't about us.

The OP will make their final decision.