What is the basis of valuation of a car for the purpose of insurance?
Normally, the amount proposed by the vehicle owner becomes the sum insured if the insurer accepts it
What is the basis of valuation of a car for the purpose of insurance?
Amrinder Singh, Ludhiana
The insured’s declared value or IDV is a very significant element which determines the scope of insurance proceeds when your car meets with an accident and a claim is raised. Normally, the amount proposed by the vehicle owner becomes the sum insured if the insurer accepts it. So, in case of the vehicle being stolen or being damaged beyond repair in an accident, the IDV forms the basis of settlement of the insured’s claim. The underwriter’s, that is the insurer’s acceptance of the sum insured proposed by the owner of the vehicle is based on the price of the brand and model of the vehicle given by the manufacturer at the commencement of insurance or renewal and adjusted for depreciation as per the schedule available with insurance companies. The IDV of a vehicle which is more than five years old or which is an obsolete model (discontinued by the manufacturer) is determined on the basis of an understanding between the insurer and the insured.