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Know Your IDV in Car Insurance

Karen Menezes Karen Menezes 06 May 2016

Get all the details on the impact of IDV in car insurance at

Why should you check your car's Insured Declared Value (IDV)? How does it impact the calculation of your premium? Learn all fascinating facts about IDV.

Know IDV in Car Insurance

IDV (Insured Declared Value) is not an alien concept in car insurance.

You could have read the name somewhere. Maybe while doing the groundwork before buying a policy.

Sadly, if you haven't, you just cannot get away without knowing how IDV is calculated. Besides, you also should know its significance in computing insurance premium.

Ready to learn the A to Z of IDV? Let's get started.

What is IDV?

In the event of loss, IDV is the maximum sum insured amount that your insurer agrees to reimburse to you. In other words, IDV is the supposed current market worth of your insured automobile.

If the IDV of your car is fixed for Rs. 5 Lacs, then that's the maximum amount that the Insurance Company will compensate you. Under no circumstances do you get Rs. 5 Lacs within the policy period.

IDV has a Significant Impact on Your Policy

Let's explain this with, not with theory, but an example.

For instance, Own Damage cover is a beneficial yet optional cover. It compensates you in case your car is said to be totally lost due to an accident or calamity.

IDV plays a vital role in calculating own damage part of the premium. This portion of the premium is up to 2-3 percent of the IDV, basis the age and cubic capacity of the vehicle.

Simply remember, the greater the IDV, the higher is the premium and vice versa. So if you haven't calculated the IDV for your car, it will be nearly impossible to arrive at the OD premium.

Choosing an IDV Different from the Car's Market Value

When we talk about adjusting the car's IDV other than the market value, there are two scenarios to it:

What Happens if You Declare a Low IDV?

An IDV lower than the market value is because your car's OD premium is directly proportional to the IDV. This means that lower the IDV, less the premium you pay.

A lower IDV might help you save on premium. However, you'll be compensated with a lower claim amount in case of an accident. And if the accidental expenses are more than the IDV received, then you'd have to unnecessarily spend a bomb.

Is it a Good Idea to Declare a Higher IDV?

Let's assume the claim amount will accordingly increase. If you were to sell your car, it would command a higher price than the actual market value. However, that is not always the case.

At best, IDV is the maximum sum insured amount that the insurance company pledges to compensate for your loss.

Ultimately, you need to remember that:

  • Get an IDV that is close to the market value of your car
  • Decreasing the IDV value will result in lower premium and low coverage
  • As your car grows older, the IDV decreases as it is

Thus, opting for IDV higher than current market value may result in rejection or delayed / limited claim settlement.

How to calculate IDV for car insurance

Insured Declared Value (IDV) is the maximum value that an insurance company is liable to pay you in case of total loss of your vehicle. The IDV of your car depends on the manufacturer's listed selling price of the model of the car and the brand. Higher the age of the car, higher would be the depreciation percentage too. This amount of the depreciation is fixed.

In short,

IDV = Manufacturer's listed selling price or Ex-showroom price x Depreciation factor

Remember that a car that is new will always have the maximum IDV, but will gradually lower down due to depreciation.

Mentioned below are the standard rates of depreciation specified by the Motor Tariff Act:

Your Car's age % Of Depreciation For Calculating IDV
Up to 6 Months 5%
6 Months to 1 Year 15%
1 - 2 Years 20%
2 - 3 Years 30%
3 - 4 Years 40%
4 - 5 Years 50%

The IDV of the accessories fitted to the car but excluded in the manufacturer's listed selling price is also to be fixed in a similar fashion.

The below mentioned formula summarizes the Insured Declared Value (IDV) in a crisp manner:

IDV = {[(Manufacturer's listed selling price) + (Sales Tax) + (Accessories excluded – depreciation)] – (Depreciation + Registration costs + Insurance costs)}

IDV calculation for a new car less than 6 months

A new car has maximum IDV but as the car ages, the rate of depreciation keeps shooting up. This drops the IDV.

For example: The car that is less than 6 months old carries a depreciation rate of just 5%. On the other hand, a car that is 4 to 5 years old will be charged a depreciation of 50%.

IDV calculation for a car more than 5-years-old

You may ask what about obsolete car models or cars aging more than 5 years?

In such cases, the IDV is determined as a result of a mutual understanding between you and the insurer.

Here instead of rate of depreciation for calculating IDV, IDV is arrived at by assessing the condition of the car. This is carried out by the dealer or insurance surveyor.

When your car's age is more than 5 years, your IDV depends on:

  • The manufacturer
  • Car model
  • Availability of the spares parts

Assess the IDV during policy renewal.

When your policy is up for renewal, do not simply agree to pay what your insurer asks you to.

You have to check the IDV of your car and if the premium is justifiable or not.

If at all you find yourself unhappy with the figures, don't hesitate to negotiate or change your insurer. Make sure you receive the right kind of coverage at the right kind of cost.

While renewing your comprehensive policy remember that the premium is determined by this factor. If your car has a higher value, you end up paying more premium and vice-versa.

Ultimately, this is the right opportunity to adjust the IDV value, as per your choice.

Since this is possible online, do it with It's really easy.


Buying insurance for your car is a long-term investment. When claiming you may not get what you expect, thanks to deductions in reimbursement of IDV.

By now you know that IDV definitely affects your policy.

It's your right to preserve the right IDV value for your car. So be alert and always check on your IDV.

Want to learn more about IDV? Watch this cool video!

Karen Menezes
Written by Karen Menezes
An optimist at heart, Karen loves to see the world through a pair of rose-tinted glasses. An award-winning blogger, she loves to dream with her eyes open. Writing is not her passion, it’s an OCD! If at all she isn’t writing, you can find her shopping online or experimenting with DIY recipes.