Pros and cons of higher, normal or lower IDV

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According to a recent media report, Delhi reports the highest number of vehicle thefts among 28 states across the country. Data from the National Crime Records Bureau (NCRB) from 2019 shows that a vehicle is stolen every 12 minutes in the Capital. In Mumbai, one is stolen every four hours and in Bengaluru every two hours. Vehicle thefts constitute about 14% of all the crimes in the city.

In the first half of 2020, around 13,000 vehicles were stolen in Delhi. In 2021 this figure rose to over 16,000 despite a lockdown, restricted movement and more vigilance on the roads. In spite of high end gadgets, the security systems are dismantled within minutes and vehicles are carried away. By the time owner realises the theft in the morning, significant time lapses and vehicle is often taken away into other states with fake registration number plates. Often it’s difficult to nab the stolen vehicle due to time lapse and vehicle at a remote place, dismantled or sold in meantime.

Vehicle theft is comparatively a low risk crime that does not involve direct violence, it can be conducted at night with ease and chances of going scot free are high. There is rampant syndicate racket of vehicle thieves that operate across states in tandem with each other.

Low recovery rate

Of the 35,019 vehicle theft cases in 2020, only 4,183 (12%) stolen vehicles were recovered. It means that near to 31000 owners might have gone in for claim to the insurance companies ..

SUVs and high end vehicles are most commonly targeted because they fetch a high price and are in demand.

With these alarming statistics, it is pertinent for every vehicle owner to secure and insure their precious vehicle bought from their hard earned money.

Points to note

Many a times while buying an insurance cover, owners are tempted to reduce the vehicle’s IDV to save on premium. At times, agents too advise this to keep the premium low and close the sale. Let it be clear that declaring a lower IDV to save on premium is not at all a prudent decision. IDV is the maximum amount of compensation you can expect from the insurance company as compensation in case of a total loss due to accident or theft. So, if the owner has declared a low IDV, he/she will only get a lower amount than the actual value of the car. Hence, in an effort to save a small amount of premium, there is a much bigger loss accrued to the owner .

Let us look at this fact with an example of Honda City model having IDV of Rs 6,19,020 having NCB of 35%. The premium is Rs 11,447. If you go for higher IDV of Rs 7,42,824 then premium to be paid is Rs 13,032 ,which is higher by Rs 1,585 but in the event of theft/total loss, you will get an additional amount of Rs 1,23,804.

(The writer is Director and founder, RIA INSURANCE BROKERS. Views expressed are personal)