What do you need to know about Insured Declared Value (IDV)?

Car Insurance is mandatory for every car in the UAE. It is not legal to drive a car without insurance according to the RTA UAE. Though the working of the car insurance is simple; It financially protects your car, the driver and the passengers from unforeseen circumstances like accidents, natural calamities or any damages, there are certain terms related to the car insurance that an insurance buyer should understand. 

There are several important terms associated with car insurance like No Claim Bonus, Add-Ons, Grace Period, Car Totaled, Insured Declared Value, and much more. These terms can be confusing especially for a first-time buyer. The insurance buyer should understand these terms to find the right insurance policy that suits their requirements. Buying insurance without understanding the terms related to it can end you up with the wrong insurance which can be of no use or not meet your expectation at the time of serious need. 

Insured Declared Value (IDV)

Out of all the important car insurance terms, Insured Declared Value (IDV) is an utmost essential term. It is the value or the amount the insurance provider is going to offer the insurance holder at the time of reimbursement. 

It is well known that a car value depreciates over time and IDV is the current market value of your car. The car insurer would consider all the details like car make, model, brand, add-ons on the vehicle along with the depreciation value to obtain the IDV. So when you claim your car insurance coverage in the future during the policy tenure, the total coverage provided on the policy will not be the value of the vehicle when you bought it, instead, it would be the IDV. 

The IDV is calculated at the time of car insurance purchase  only and the premium value depends on it.   

Factors that impact the IDV

The factors that would determine your car’s IDV are, 

• Age of the Car: The age of the vehicle is one of the crucial factors to determine the IDV of the car. The older your car is, the lower IDV is set. 
• Car Make & Model: As IDV would be the current market value of your vehicle, the car make & model is also considered. For luxury cars from brands like Lamborghini, Rolls Royce, BMW, etc. the IDV is high. 
• Location: Along with the age, brand and model of the car, location is considered to calculate the IDV. 
• Accessories: When you have accessories on your car like a special sound system, GPS navigation, Bluetooth, etc, these accessories also depreciate over time and ultimately affect the Insured Declared Value (IDV) of the car.   

Why should you know your IDV?

Knowing your Insured Declared Value is very important during your car insurance premium purchase in UAE is because, 

• Firstly, you will know how much compensation you can expect if you claim your car insurance coverage during any repair, accident or theft, etc. As most insurance buyers would be expecting the exact vehicle purchase value to be reimbursed, the IDV will give a clear idea.  
• The premium value of your vehicle depends on the IDV calculated. The higher the IDV, the higher the premium value. 

How to calculate your car IDV?

Your Insured Declared Value can be calculated using the Online IDV Calculator or manually. 

The formula used to calculate the IDV is, 

With Accessories: IDV = (Vehicle Purchase Value – Depreciation Value) + (Accessories Value – Depreciation of Accessories)

Without Accessories: IDV = (Vehicle Purchase Value – Depreciation Value) 

The Depreciation Value depends on the age of the vehicle.