How much does the insured declared value of a car depreciates over time?
You must know that the value of your insurance policy is based on the Insured Declared Value (IDV). Insured Declared Value is understood as the maximum sum that the insurance provider agrees to pay you in case of total damage to your vehicle. For a new car, the Insured Declared Value is calculated on the showroom’s listed price.
The Insured Declared Value of your vehicle does not remain constant. It changes every year with every renewal of your insurance policy. Now, why does the Insured Declared Value decrease?
On renewal of your Car Insurance policy after one year, the Insured Declared Value will decrease due to the rate of depreciation that is applicable on vehicles. The depreciation schedule usually starts from 6 months. Initially, the depreciation rate will be 5%, then it will be 15% when the car has been used for a year, from the second year, the depreciation rate will be 20% and will go up by 10% every year.
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