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-   -   Can I reduce the IDV of my car to save on premium? (https://www.team-bhp.com/forum/indian-car-loans-insurance/282919-can-i-reduce-idv-my-car-save-premium.html)

I am thinking of setting the IDV of my Hector Plus 2023 to 15 lakh instead of the default of 19 lakh for an upcoming insurance renewal. This will reduce my premium and as I understand, the only thing IDV is used is in case of car being totalled or stollen. I am OK with the reduced amount of 15 lakh in these cases.

Is there something else I should be worried about?
I want no hassles in claims.

If you have a Return to Invoice cover then I see no issue in reducing your IDV. RTI will save you from a major loss due to theft or car getting totalled. At least for the first 3 years of ownership I would suggest to safeguard against such possibilities. An RTI cover will save you 8-10 lacs (on road price minus the low IDV) for a premium of 3-4 k additional, while you can keep your IDV low to compensate for this extra cover charge.

All the best:thumbs up

Yes, you can, if it is allowed. There is a minimum IDV, beyond which it cannot be lowered further.

I would suggest you also check voluntary deductible. With just 2500 or 5000, it reduces premium quite significantly. I have used 15K voluntary deductible also. This means for any expense less than 30k, I will not claim any damages.

You are allowed to, but, I would strongly recommend against it. After this step down, you will further face yearly depreciations on the IDV and even if you want to bring it up someday, it can never go up.

Atleast for insurance, I would like to get the max coverage. You never know when it comes handy.

Thanks for a different perspective. I just renewed my Dad's car insurance 4 days back and have all the add on covers like RTI, Engine protect, Consumables etc. and was thinking that did I miss something by not reducing the IDV by reading through this thread.

I have mostly seen people asking to increase the IDV of their cars so that they have higher coverage in case of any eventuality. This is the first time I see someone asking to reduce the IDV.

What is the difference in premium between the two IDV values ? Remember, most of the premium we pay is on Third Party damage and other covers if one has. Third party component is increasing steadily, while Own Damage component keeps reducing every year. And if you have good NCB, then difference in Own Damage component will reduce even further.

Thanks for the reply. The difference is around 8-10k if I add all the must-have add-ons along with Return to Invoice.

I don't have an NCB.

If I am OK with the lower IDV (4 lakh less than actual) and am taking a RTI, what could be the problem? I don't think it makes sense to pay 40-50% more premium every year to get 3-4 lakh extra that too in the extremest case of theft/total.

From what you say, it looks like you took insurance from the dealership where you got your car, and did not compare with outside quotes ?

Yes I took my last insurance from dealership, but this time, I checked Policybazaar too.

Your IDV should atleast be equal to the current market value of the car, a insurance agent told me that incase of total loss or theft, insurance company pays you IDV or the current market price of the car whichever is lower.

Grossly incorrect. Who defines market value? one's estimate may be grossly off from mine. In any case of total loss/ theft, IDV as per the standardised IDV table promulgated by IRDAI is the payout. This table can easily be 'googled' online and is the benchmark. having an IDV higher than this serves no purpose and having a lower one will limit your claim to the lower IDV.

P.S.- Speaking from practical experience of two Total losses (different company each time).

In my experience, the difference in premium between the minimum and maximum IDV scenarios is quite small (around 5% of total premium), so I have always gone for the maximum allowed IDV.

Note I have not purchased RTI, this is purely for a plain-Jane comprehensive insurance purchase.

I would not suggest lowering the IDV just to save on the premium. It is unfair to underinsure your car, there is a specific reason why the depreciation table for the IDV is mentioned in the Policy document.

Also RTI add on cover does have its own Terms and conditions which must be read to understand the applicability. The cover is generally available for the first three years of ownership at sole discretion of the Insurance co. Once the cover is unavailable and the IDV is already depreciated more than the table, it will be very difficult to justify any increase in IDV which will come at a higher premium then. So it is suggested to calculate the IDV either by the table or by thumb rule of 10% less than previous year IDV.

It is not just theft/total loss that the IDV comes into picture. If you have a claim, they will approve it only as long as it is <75% of IDV. If it is beyond that, they'd recommend a total loss on the vehicle.

Instead of reducing the IDV, look at the add-ons. Keep just 0-dep, or at most RTI. No point burning the forest to save the trees.

I have always made a point not to reduce the IDV during each renewal event hough I had RTI add on till on my 2020 creta. I feel if you keep on reducing the IDV on each renewal, once you cross the 4/5 yr mark and you don not have the option to have the RTI as an add-on, your car's value will be much lesser (~40% of the showroom value). While resale it may not impact, but in case of an unforeseen event, you will have to bear a big loss just coz you saved a couple of thousands while renewing.