Is changing your IDV and deductible for lower premiums worth it?

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Car Insurance
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Is changing your IDV and deductible for lower
premiums worth it?
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When you decide to purchase a new car, you dont
just blindly visit any showroom and purchase the
first one that you see- you first research,
compare and then choose the one that suits your
needs the best. In a similar way, when you are
purchasing an insurance policy for your vehicle,
ensure that you scrutinize all of its aspects and
compare them with your needs. After all,
purchasing a good car insurance policy is as
important as buying a good motor vehicle.
Further, an insurance policy will even protect
you against the perils when you are plying on the
streets. However, insurance companies charge you
with a certain amount of money in the form of
premium for the services that they provide you.
However, many-a-time, people often compromise on
their vehicles protection by opting for a car
insurance policy with the lowest premium. But
they forget to consider the fact that the best
things often come with a price-tag. Thus, today
we will be discussing the impact of reducing your
IDV and deductibles on your insurance policy.
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What is IDV?
But before that, let us understand the concept of
IDV and deductibles as a whole. IDV or your
insured declared value is the amount of money
that the insurance company will be liable to pay
you in the case of damage or theft of your car.
Your cars IDV decreases with each passing year
because, your vehicles value depreciates with
its increasing life span. However, you do get the
option to change these values when you are
renewing your policy.
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What is a deductible?
The amount of money that you have to shell out
for repairs of damages to your vehicle is termed
as a deductible. Further, deductible has two
parts in it- voluntary and compulsory. A
compulsory deductible is the fixed claim amount
that you have to pay to the car insurance
company whereas, the voluntary deductible is the
amount that you decide to pay on your own.
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How do IDV and deductibles affect your insurance
premium?
The car insurance company decides your premium
amount on the basis of the make and model of your
vehicle, your engine capacity, location,
accumulated NCBs (no-claim bonuses), coverage,
deductibles, IDV (insured declared value), etc.
Therefore, what we can understand from this
information is the fact that your IDV and
deductibles play a huge role in determining your
insurance premium. Therefore, you can opt for a
lower IDV and higher deductible to decrease your
premium amount.
However, with the decrease in the premium amount
even the protection offered by the insurance
companies is reduced. Meaning, if you decrease
the IDV then you will receive a lower amount of
claim money (in the case of theft or loss of your
car). And if you opt for additional car insurance
deductible then you will have to shell out more
amount of money for the cars repairs. Therefore,
in our opinion, if you believe that you arent
the type to be a part of an accident, then you
can choose to lower your IDV and increase your
deductibles to save on the premium amount.
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