Clearing doubts about car insurance claims & IDV

Every insurance provider has IDV options as - lowest, best & custom. What if the buyer sets the IDV to the invoice value of the car?

BHPian superbad recently shared this with other enthusiasts.

I have a couple of queries about car insurance claims. If one has selected the "Return to invoice" or "Invoice cover" add on in his/her car insurance policy, in case of a total loss/theft claim, will the person be entitled to the full invoice amount of the vehicle minus deductions? In this case, does the IDV have any sanctity? 

Secondly, every insurance provider has IDV options as - lowest, best & custom. What if the buyer sets the IDV to the invoice value of the car? Will he / she be entitled to the full amount minus deductions? Or will he received a depreciated amount?

Any answers/thoughts/opinions would be much appreciated.

Here's what BHPian vik99 had to say on the matter:

Return to Invoice (RTI)/ Invoice cover are usually not available after the first three years of buying the car. In case RTI add-on has been purchased the person will be entitled to the on-road price of the vehicle.

Higher IDVs only serve to raise the premium. Pay-out in case of total loss will be as per depreciated value of the vehicle. It is best not to inflate IDV unnecessarily. Use the IDV calculator from the General Insurance Council to get an idea of the ideal IDV for your vehicle.

Here's what BHPian Altocumulus had to say on the matter:

That's not the correct information. IDV is the agreed value of the car with the insurance company. They are liable to pay the same minus the scrap value which will be paid separately by the scrap dealer.

Insurance will say that they will give depreciated value, and people who don't know agree to it. Once you agree they will make you sign it. Once signed nothing could be done. Also sometimes they decide a scrap value (which is way above the market scrap value) and say you find a scrap dealer and sell the car as scrap. Never agree to that, tell them to get their scrap guy, you just need the total IDV amount in your account. How they do that is their problem.

I follow a simple process. If am getting RTI, I keep the IDV low. If no RTI, the highest IDV possible.

They are however there is a provision where the policy holder can do it if they want. That is what they try to push. Ideally if u sell the parts by piece separately you will get a lot more. But of course that is a huge hassle. So it's better not to agree to it and tell them to do it.

A point to note, the scrap dealer will withhold some money till you get the registration cancelled.

Here's what BHPian tiagoatrix had to say on the matter:

I had two options while renewing my 4 years old Tiago's Insurance from a public limited company,

• IDV - Rs 2.5 Lakh; Premium - Rs 6,000
• IDV - Rs 3.5Lakh; Premium - Rs 9,000

6 months after insurance renewal my beloved Tiago met with an unfortunate accident, Gearbox and under body parts had an impact, after much deliberation surveyor decided to go with total loss as repair cost was not profitable for the insurance company.

After a number of office visits and few weeks of time, I received NEFT of 3.5L to my account. My Tiago went as a scarp for 80K, rest was from insurance company's pocket. An extra two thousand helped me save 1 L.

Our country records most number of road accidents in the world, resulting in life and material loss, number of squids in roads has increased multiple folds in the last few years, there's little to no road discipline. A term insurance and solid car insurance is must in IMHO.

Zero dep, RTI, Consumable covers if offered should be taken without second thought. Spending few thousands extra on premium will help you in case of a mishap, odds are high in India.

So, in case of total loss /theft, RTI will fetch the on road price of your vehicle or a new vehicle of similar specification. RTO value will always be higher than IDV

IDV is the value you will be paid by the insurer in case of theft /total loss. IDV will keep reduced every year because of depreciation, whereas RTI will be constant as your invoice amount.

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