Buying a car is one of the most common dreams in India. Even though buying a car is common, the vehicle is extremely valuable to anyone that owns it. These days it has become a stage in life. This means that sooner or later everyone will buy a car. Therefore, the automobile industry in the country has grown tremendously with the display of models in showrooms in various sizes and price ranges. As competition in the market becomes stronger, it is becoming more and more difficult to find a vehicle that suits your needs.
The convenience of going to work in one’s own vehicle rather than on a crowded public transport bus is unmatched. You can also make immediate plans for weekends away from the city. The easy availability of car loans has made it easy to buy your dream car without having to worry about financial matters. Banks and non-bank financial institutions have come up with innovative car financing products with affordable equity monthly installments (EMIs) that make car buying easier than ever.
When you buy a vehicle, you also need to remember the appropriate four-wheeler insurance for it. Car insurance is mandatory for all car owners and driving without it is a punishable offense. When you buy a car insurance policy, keep a few things in mind so that you can get the most favorable coverage at a reasonable cost. That means you need to know all the nuances of four-wheeler insurance and the myths surrounding them. The best example of this is depreciation value and IDV.
What is depreciation?
Depreciation can be best described as the loss of monetary value of a car. This decrease in value is a result of the vehicle’s increasing age. The older the car, the greater the depreciation. For example, two cars of the same model have different monetary value because they were made in different years. Moreover, the driving history and the overall condition of the car are also a determining factor in the monetary value of the car.
What is the depreciation value of car?
The first thing you need to understand is that your car is an asset. Each asset has a different market value. This value changes over time after you purchase the property. It appreciates / increases or decreases / decreases. In the case of a vehicle, under normal circumstances the market value will decline over time. This means that the monetary value of a vehicle is deducted from its purchase price to its current market value based on the age of the vehicle, driving record, etc. The updated market value that you will have after depreciation has been deducted from the original market value is called the depreciated value of the car.
What is IDV?
The terms and vocabulary you will find when you buy car policy online are very confusing and a phrase that often appears in documents is Insured Declared Value (IDV).
This is the abbreviated form of Insured Declared Value (IDV). It is the maximum amount you can get under your motor insurance policy in the event of total vehicle loss. This includes extensive damage in an accident or car theft. The insurance company will determine the insurance premium for your vehicle based on the IDV. So, it is important that you choose the right amount as your IDV.
Now, the IDV you pay when the total loss occurs is the current market value of the vehicle. Therefore, your IDV will be the market value of your vehicle at the time of purchase of the policy. Now if your IDV is low it means that the market value of your vehicle is low. This translates to less coverage for your vehicle. You can decide a higher IDV for your vehicle at the time of renewal through a motor insurance app. But this will cost you a higher premium. Hence, your IDV has an effect on the premium you pay for your policy. So, when buying a policy you should focus on the IDV that your insurance company will provide you.
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