by According to the Indian automobile market research reports, the sales of used cars have grown exponentially over the past couple of years, especially after the pandemic. If you own a used car, you must be informed about the current value of the vehicle. This will help you get the right if you want to resell it and buy a suitable car insurance policy online.
Many used car owners tend to increase their car prices unnecessarily. However, in doing so, they find it hard to sell their car and end up paying a high premium. So, it is paramount to set the valuation of your car right. used cars in san diego
If you are unsure how to determine your used car’s value, you have come to the right place. In this blog, we discuss how to correctly determine used car valuation and its impact on insurance.
How to determine the value of your used car?
While buying or selling a used car, you must know its exact market value. You may need to know its actual worth to be able to set the right price for it. Car valuation is a technique to determine the vehicle’s fair value based on several factors like previous accidents, depreciation, model and make of the car and manufacturing date. The value of the vehicle you may determine based on the factors above is called IDV (Insured Declared Value).
The Indian Motor Tariff, in its General Regulation, numbered 8, lays down a standardised depreciation rate for assessing the correct value of used cars based on their age.
|
Car’s Age |
Depreciation in percentage for calculating IDV |
The actual IDV |
|
Up to six months |
5% |
95% |
|
More than six months to one year |
15% |
85% |
|
More than one year to two years |
20% |
80% |
|
More than two years to three years |
30% |
70% |
|
More than three years to four years |
40% |
60% |
|
More than four years to five years |
50% |
50% |
How does the valuation of a used car affect its car insurance cost?
If you are selling a used car, having a lower valuation would mean you will incur a loss. In addition, the lower IDV would also mean a lower payout from the insurance company if your car gets completely damaged in an accident or due to a natural disaster.
In contrast, if you set a high valuation for the used cars, the potential buyer may feel discouraged from purchasing the car. Also, higher valuation can have a negative impact on your car insurance premium cost; the insurers charge a higher premium for high-value cars. Therefore, setting the correct value of the vehicle is critical to get the best price when you sell the car, get appropriate compensation from the insurance company and pay the right premium for insurance coverage.
Similarly, if you are buying a used car, you must know the exact market value of the car so that you pay the right price. Also, when you buy a used car from a seller, make sure to transfer the third-party coverage to your name within 15 days of buying the car. You can continue with third-party insurance or purchase a new comprehensive policy.
Final Word
Thus, knowing the value of a used car is paramount for both buyers and sellers. It significantly impacts the insurance cost and allows you to get the right compensation from the insurance company.
