It is only human to want more, is it not? The greater the merrier. However, with regards to auto insurance policies, does having a higher insurance cover really seem sensible? Just how much car insurance do you want?
While the choice of the coverage level in a life and health insurance policy is in both hands, in case of car insurance policies, the coverage level depends upon the car's IDV. Do you know what IDV is?
What is IDV?
IDV stands for Insured Declared Value. It's calculated as the current market value of your vehicle after deducting the age-based depreciation. IDV calculation also excludes the costs incurred in registering and insuring your vehicle. The rate of depreciation applicable in IDV calculation is as follows –
If the automobile is over the age of Five years, the IDV is calculated by mutual agreement between your insurance company and the policyholder.
The IDV represents the sum insured of your car insurance policy. It's payable if the car is broken completely or maybe it's lost or stolen.
Now you know the concept of IDV, let's know how much auto insurance do you require?
For new cars
If you buy a brand new car or perhaps your car can be 3 years old, choosing the maximum IDV is the perfect choice. A high IDV would keep up with the worth of your car and be sure a higher settlement of claim in case of total loss or theft from the car. Different insurance providers might provide a different IDV for the similar car. As such, you need to compare different auto insurance policies on their own IDV, coverage features and premium rates and then try to buy a plan which offers the highest IDV.
For older cars
Cars that are 4 years old do not require high IDVs. Such cars' life spans are nearing their end. Many individuals, usually, use their cars for 4 or 5 years with an average and then replace them. That's the reason, a car insurance plan for an older car, which is near being replaced, can make use a lesser IDV. In fact, low IDVs be more effective for older cars as they assist in saving premiums.
Don't forget about the available add-ons
A comprehensive car insurance policy also offers you optional add-on coverage features. These functions enhance the coverage of the plan but cost extra. Are they required?
Yes, they are. Some of the add-ons are quite useful during the time of claim and really should be added to your car insurance plan depending upon their suitability. Here are some of the important add-ons which you should consider in your auto insurance plan –
- Zero depreciation cover – under this cover the effect of depreciation in your car insurance claims is nullified. The insurance company pays the entire worth of claim for repairs from the depreciated parts of your vehicle.
- NCB protect – you earn a no claim bonus in your car insurance plan whenever you don't claim. This gives a premium discount in subsequent policy years. However, just one claim wipes the NCB discount. NCB protect add-on protects the accumulated NCB even when you make a claim
- Roadside assistance – this add-on gives you 24*7 assistance in case your car stops working in the middle of the road and also you cannot reach the nearest garage for repairs
- Engine protect – this add-on is helpful if you are residing in a flood prone area. The add-on covers the harm suffered by the car's engine due to waterlogging
- Return to invoice – under this add-on, the invoice value of the car is paid in the event of total loss or theft.
You should choose the accessible add-ons according to their suitability. Don't choose add-ons unnecessarily. Newer cars require zero depreciation, return to invoice and NCB protect add-on. If you live in an area where monsoons cause water-logging, engine protect add-on should be your obvious choice. Roadside there's help helpful should you continue frequent road-trips.
So, when buying your vehicle insurance plan, pick the correct IDV based on your car's age. Include the required add-ons for any more comprehensive coverage. By doing this, your car would be insured for that correct value.
Check out our video below to know the comprehensive motor insurance in detail
