How Car Insurance Companies Value Car

There are two things that car buyers need to worry about—the cost of the car and the cost of its insurance. Much like keeping a phone without buying a case, buying a car and keeping inadequate insurance is just asking for bad luck!

Whether you’re looking at New India Assurance, ICICI Bank Insurance, Royal Sundaram Car Insurance, or any other company, the basics are the same.

But what is adequate insurance? You can only know this once you understand how insurance companies value cars in the event of having to pay a claim.

Understanding the Importance of the Insured Declared Value

The first thing to understand about car insurance is the Insured Declared Value. Once again, choose Royal Sundaram Car Insurance or any other company, the IDV has to be taken into account.

• It is basically the maximum amount the car insurance company will pay in a claim of ‘total loss.’ Your car is damaged beyond recovery? Someone stole your car? The amount you will get from the insurance company is the Insured Declared Value or IDV.
• The Insured Declared Value is the present market value of the vehicle after deducting the depreciation on its parts. The older your car is, the lower the IDV is, naturally.
• Amongst other exclusions, the cost of registration of the vehicle and its insurance premiums are not counted in the IDV.
• The IDV of parts that are not official or factory-fitted are calculated separately as well.

Sadly, even if your brand new car which was only a day old is stolen, there will be a depreciation amount of 5%.

Calculation of the Rate of Depreciation for IDV

Depending on what company you choose, the rate of depreciation will differ, particularly for cars 5 years older or over that. However, there’s a generally accepted amount in the business that depends largely on the age of the car ex-showroom.

• Less than 6 months: 5%
• Between 6 months and a year: 15%
• Between 1 year and 2 years: 20%
• Less than 3 years but more than 2: 30%
• Less than 4 years but more than 3 years: 40%
• Less than 5 years but more than 4 years: 50%

But for cars that are over 5 years old, the depreciation amount differs depending on the state of the car, the engine, and other matters. The depreciation percentage is usually decided in discussion between the company and the client.

For instance, the amount you will get from Royal Sundaram Car Insurance may not be the same as the amount you get from Reliance Car Insurance policy.

Procedures Followed for Car Insurance After Your Accident

Most insurance companies, from Tata AIG to Royal Sundaram Car Insurance, will follow the same procedure in processing your insurance.

• The company will send an appraiser who will decide the value of the car. If the cost to repair the car is too high then the insurance company may consider the car a total loss anyway.
• The appraiser will then estimate a reasonable value of the car previous to the accident.
• The company will also take into account the judgment of a third-party appraiser to ensure that there can be no claim of prejudice.
• However, there will be a difference between this estimated value of your car and the amount it actually costs to purchase a suitable replacement because of the depreciation.

Replacement Cost Car Insurance

A resolution to this problem is procuring car insurance that reimbursements the cost of replacement.

• A policy that pays replacement cost will use the same processes any other form of car insurance to estimate the value of your car.
• Afterwards, it will pay you the amount required to purchase a new car similar to your lost car.
• The monthly premiums for insurance accounting for the full invoice value of your car can be significantly higher than normal car insurance.
• For example, Royal Sundaram Car Insurance Car Shield offers 11 ‘extras’ including full invoice price cover against total damage or theft.

Look at Car Insurance That Is Right For You

Check out some possibilities for car insurance below. There are many great car insurance providers in the market, and these are some of the providers that have satisfied customers for a long period.

• Royal Sundaram Car Insurance: Up to Rs. 7.5 lacs is offered for third party damage in the Royal Sundaram Car Insurance policy. There is a 50% No Claim Bonus and even Transfer No Claim Bonus if you are shifting from an insurance policy other than Royal Sundaram Car Insurance.
• Bajaj Allianz Car Insurance: This insurance policy offers up to Rs. 7.25 lacs in case of third party damage. They also offer 24/7 customer support, which can be very useful. The exclusions are the usual, including no claims allowed for damage when an unlicensed driver is driving.
• Bharti Axa Car Insurance: The Bharti Axa policy also offer up to 7.25 lacs in case of third party damage. However, this does not count for electrical or mechanical faults. It also offer two levels of covers, for specialised protection.

There are plenty of insurance offers in the market for cars, and even some intriguing new extras like the car shield insurance type. Choose what seems to be the best choice for you.