IDV in Car Insurance

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Most of us are well aware that car insurance is mandated by the law. But there are still many terms in insurance that are a little difficult to understand. These terms may seem insignificant but actually can have a great influence on your car insurance policy and thus it becomes necessary to understand them. 

One such term is IDV, you must have often heard it from your insurance agent, but do you really know what it means? Read on to know about IDV and its significance. 

What is IDV in Car Insurance?

The full form of IDV is Insured Declared Value and it refers to the current market value of your car. In simple words, if you wish to sell the car in the market today, IDV is the value that you would get for it.

It is an important factor in insurance as based on the value of your car itself, the claim amount can be determined. It is also the IDV that you would receive in case your car gets stolen or goes into a total loss.  

Why Is Insured Declared Value Important?

When an insurance company determines the IDV of your car, it is also the maximum liability that the company will take regarding your car. And as mentioned above IDV is a key element in fixing the premium you pay towards your insurance. A higher IDV means a higher premium. It should be noted here, that you must not understate the IDV of your car to lower the premium amount. In case of an accident, if a claim is to be made, the loss will be yours.

IDV Calculator

If you wish to calculate the IDV of your car, the best way to do so is using an Online Calculator. There are various websites that you can use to get a fair idea of your car’s IDV. just follow the instructions and enter the required details to calculate the IDV quickly.

However, if you want to calculate it yourself, you can easily do the same. The Insured Declared Value is calculated using the following formula:

IDV = The ex-showroom price of the car MINUS Depreciation specified in the Indian Motor Tariff. 

Make a note that the ex-showroom price also includes registration cost, insurance, and other loadings. If you have put additional accessories in your car, they would also be added up in the IDV, after depreciation. 

Depreciation has a direct effect on the IDV of the car. Let’s see how:

Age of the Vehicle

Rate of Depreciation 

Within 6 months


6 months - 1 year 


1 year - 2 years


2 years - 3 years


3 years - 4 years


4 years - 5 years


Let us understand the effect of depreciation on IDV using this example. Suppose you purchased a car worth INR 10,00,000. In six months, the value of your car would be INR 9,50,000 and would drop to INR 8,00,000 after a year. When your car is more than four years old, The value of your car would be less than INR 5,00,000. 

In case your car is over 5 years old, its model, make, manufacturer and condition will determine the IDV.  So, if your car is really well-maintained, and you plan to sell it,  you can also expect a price a little over the IDV as well.

Factors That Determine Your Car’s IDV:

Certain important factors that determine your car’s IDV are as follows:

  1. How Old is Your Car?
    The age of your car is very important as IDV itself represents its market value. As the car ages, the IDV will come down too.
  2. MMV
    The make, model, and variant of a car directly impact the IDV. For example, a Mercedes E class would have a much higher IDV than a Honda City. Similarly, hatchbacks are cheaper than SUVs and sedans.
  3. Registration Details
    The city from which you purchased the car also affects the IDV. For example, a car bought in a metro city may fetch a lower IDV as compared to the same make and model in a smaller city/town.
  4. Depreciation
    The moment you get your car out of the showroom, the standard rates of depreciation start to affect it.  As mentioned earlier, with every passing year its depreciation percentage increases.
  5. Accessories
    Though accessories may add up the IDV of your car, it must be kept in mind that the accessories too would depreciate. For example, you put a music system in your car worth INR 10,000 two years back. Today, you may ask a little more than the IDV because of the music system, but it would certainly not fetch you the same amount of INR 10,000.

How Does IDV Affect Your Car Insurance Premium?

The Insured Declared Value of your car directly impacts the premium that you would have to pay for your car insurance policy. The lower the IDV, the lower would be your premium amount. 

Advantages & Disadvantages of Increasing and Decreasing IDV 

  1. If you declare a low IDV, the consequences would be:
    1. Advantage :
      The premium cost would get reduced
    2. Disadvantage:
      The claim amount that you receive would also decrease
  2. If you declare a higher IDV:
    1. Advantage
      • Your car’s sum insured would increase
      • You can claim a higher value
    2. Disadvantage 
      • You would have to shell out more money for paying the premium
      • Inaccurate IDV may lead to rejection of claim

How to Declare A Correct IDV?

Doing a little bit of research when declaring the IDV can help you in the long run. 

  1. IDV for New Car
    For new car insurance, it is very easy to calculate the IDV. The depreciation value for a new car is 0.05%, which is almost negligible. You can subtract this amount from the manufacturer’s price and fix the IDV.
  2. IDV for Old Car
    Try surfing through the internet and find prices of other cars with the same make, model, and variant. Cater to factors like how well maintained your car is, how many visits to a garage it has made, the depreciation chart etc. You can then set an IDV which is similar to the other cars’ rates.

IDV During Car Insurance Renewal

As the time comes to renew your policy, spend some time so that towards the expiry date, you do not set the IDV in a haste. When you have a fair idea of how much the IDV would be, it would further help you in analysing the insurance policy premium. Remember, if you declare a higher IDV, the premium to be paid would also be higher, whereas declaring a lower IDV would reduce the claim amount.

IDV and Car Insurance Claim Settlement

Generally, during a car insurance claim, the IDV may not be required, however when renewing your car insurance policy, the premium is fixed based on the IDV itself. IDV plays a significant role when the claim is in the following circumstances:

  1. Theft
    When the police can not find your car, they will issue you a ‘Non-Traceable Certificate’. You can then claim the IDV from your insurance company.
  2. Constructive Total Loss
    If a car faces damage of 75% or more because of a contingency, then the repair costs can exceed the IDV, and most probably, a total loss claim may be raised.
  3. Total Loss
    If your car gets damaged beyond repair, then you have to raise a total loss claim. To settle this claim, the car insurance company would pay you the IDV.

Points to Consider When Calculating IDV 

When calculating IDV, thorough research will prove to be a very prudent step.

  1. As fast as possible, try and declare an accurate IDV
  2. If you reduce the IDV, you will reduce the claim amount and suffer losses in case of an accident
  3. Overstating the IDV will increase the premium amount
  4. A claim for total loss/theft may be rejected if the IDV is inaccurate
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