Re: Automobile Insurance Queries? Ask me Quote:
Originally Posted by hemanth.anand One of my colleagues is about to renew his car insurance.
We had a debate over the IDV and I wanted some clarification regarding the same.
While getting an on-line quote, he had an option to increase the IDV (to a certain extent). He can decrease it too.
I told him to increase it so that he has more cover | Quote:
Originally Posted by ghodlur Ideally IDV needs to be calculated on the basis of the manufacturer's current selling price of the model (ex showroom cost only) times the depreciation applicable based on the years of ownership. The manufacturer's cost if changes on yearly basis then the thumb rule of every year depreciation % of 10 is not applicable. This is known to all insurance co, but still they allow the vehicle owners to fix the IDV (increase/decrease). The advantage for Insurer is higher premium and for the owner is a false sense of satisfaction that the car is insured for a higher amount. But the true reality is reflected when there is a case of total loss, thats the time when the Insurance co come to their senses and start calculating the IDV based on the real calculations. If owner debates this then the IRDA ruling is shown to the owner. This way the owner cant approach the IRDA since he is at fault for over insuring the vehicle than the actual. Insurers go scot free when owner agrees to Insurance co terms of total loss calculations.
Therefore it is a religious exercise which every vehicle owner must do is to calculate the correct IDV based on the prevailing car prices at the time of renewal |
Thank you guys for bringing this up, as I am about to renew the insurance of one of my cars. After reading today's posts on this thread, I thought it is better to hear from the insurance guys itself regarding this. Hence, just had a chat with a couple of them.
This is what I understand. IDV is based on the ex-showroom price of your car (when you purchased it). At the time of purchase you already have a 5% depreciation applied to it. From then on, every year an added 10% depreciation is applied. This is the ideal case.
Now you have an option to go down by another 10% of the IDV as calculated (by the above method) or go up by 15% or 20%. This is the range of IDV shown. But he himself said that it is better not to go for the higher IDV as compared to the ideal one. He explained something like, they go by the market value at the time of total loss and from how the guys explained it, I did get a feeling that if I have to get that higher IDV in case of a total loss, I would really have to be behind those guys and be lucky. He said that they would even hesitate to declare total loss so easily (depending on the case ofcourse), especially if the vehicle is insured at 20% higher than it's ideal IDV. The lower 10% (the lower range) from ideal IDV is normally preferred by those guys who are about to sell their car, as per them.
As some one mentioned above, if the agreement says you have paid premium for the higher IDV, ideally the insurance company is supposed to pay you that amount, but it is not as straight forward as that, as per what I understand now.
Last edited by ajaypjayaraj : 27th November 2014 at 12:38.
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