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What is Insured Declared Value and Why is it important?

Insurance and policy terminology can be daunting for most people. This causes many people to misunderstand technical terms and their meaning.

Insured Declared Value is an important insurance terminology that is widely used but still misunderstood. The term simply means the declared value of an asset.

Concerning car insurance, Insured Declared Value means the declared market price of your car or the sum assured when you insure your car. This is extremely important as based on this value, the insurance provider will decide the claim amount.

Firstly, we need to know how Insured Declared Value is calculated based on the time of purchase -

● Newly purchased car -

At the time of purchase, the Insured Declared Value is calculated based on the listed selling price minus the depreciation (generally 5%), which is approximately 95% of the ex-showroom price.

● 2. Used car (outside showroom price)

Once the car has been on the road, the car's value is depreciated every 6 months which reduces the Insured Declared Value. So in a scenario where you have to renew your policy, the premium will be calculated based on the total depreciated value at the time of renewal of the policy.

Apart from this, there are two main scenarios where your IDV will come into the picture:

1. The highest value is reimbursed to the insurer in case of theft or severe damage to the car

2. The higher the IDV, the higher will be the premium amount you’ll have to pay

Once you calculate based on the time of purchase you would get the accurate Insured Declared Value. A common dilemma that people face is if they should declare the accurate value or increase/decrease to get more benefits? To break it down, the main disadvantage of declaring a higher Insured Declared Value is that you’ll have to pay a higher premium amount unnecessarily and if you declare a lower Insured Declared Value the sum insured will be lower which would eventually be a loss for you. This is why we recommend declaring the correct value.

Calculating and declaring the accurate value is extremely important because of two reasons -

1. The highest value is reimbursed to the insurer in case of theft or severe damage to the car

2. A comprehensive car insurance plan primarily covers third-party liability and protects from risks associated

with own damage. If you do choose to take a comprehensive plan, the premium paid for personal damage protection depends on the Insured Declared Value.

The best way to make sure you're declaring an accurate value is to research online about your car and the general Insured Declared Value pitched in the market. Apart from that, you can also check out the Chola Comprehensive Car Insurance policy that will give you insight on how you should go about declaring Insured Declared Value.

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