The premium is calculated on the basis of
something called the Insured Declared Value
(IDV) of the vehicle, which is basically
the depreciated value of the vehicle agreed
upon by the insurer and the policyholder.
The IDV of a vehicle reduces with age. Insurers
give a depreciation schedule for up to five
years, which is the starting point for deciding
the IDV of a vehicle: this IDV figure is
scaled up or down depending on the condition
of the vehicle. The depreciation schedule
is identical for two-wheelers and four-wheelers
(See table: IDV Depreciation Schedule) You
can get your vehicle insured for a value
greater than the IDV calculated on the basis
of the specified depreciation schedule,
on account of, say, better maintenance or
high-priced accessories.However, in case
of a claim, the onus is on you to justify
the higher IDV.
Cover for occupants of vehicle. This section
provides cover against death or injury to
the vehicle driver and passengers. The maximum
cover that can be taken under this section
is Rs 1 lakh for a driver and Rs 2 lakh
for each passenger.
IDV
Depreciation Schedule
Vehicle Age
Depreciation(%)
IDV (Rs)
6 Months
5
Year 1: 2,00,000
6 Months - 1 year
15
Year 2: 1,60,000
1-2 years
23
Year 3: 1,28,000
2-3 years
30
Year 4: 89,600
3-4 years
40
Year 5: 53,760
4-5 years
50
Year 6: 26,880
Note:
The depreciation rate is charged as a percentage
of the cost of a new vehicle, on a reducing
balance basis. IDV of vehicles that are more
than 5 years oldand of models that manufacturers
have discontinued is to be determined on the
basis of an understanding between the insurer
and the insured.
*1-For a new Maruti 800, costing Rs 2 lakh
Rates as of August 2003
