What Is Insured Declared Value? IDV Explained
Introduction: Why Insured Declared Value (IDV) Matters
Did you know that 68% of Indian car owners underestimate their vehicle’s Insured Declared Value (IDV), leading to insufficient coverage? IDV isn’t just a technical term—it’s the maximum amount your insurer will pay if your car is stolen or totaled.
Let’s demystify IDV so you can make informed insurance decisions.
In this guide, you’ll learn:
What IDV means and how insurers calculate it
How IDV affects your premium and claim payouts
Common mistakes to avoid when selecting IDV
Pro tips to balance coverage and affordability
What Is Insured Declared Value (IDV)?
Insured Declared Value (IDV) represents your car’s current market value minus depreciation. It’s the cornerstone of your car insurance policy because:
- Determines your premium for own-damage coverage
- Acts as the maximum claim amount for total loss/theft
- Impacts add-on covers like zero depreciation
How IDV Differs from Market Value
| Factor | IDV | Market Value |
|---|---|---|
| Purpose | Insurance claim basis | Resale price reference |
| Calculation | Manufacturer’s price – depreciation | Buyer-seller negotiation |
| Fluctuation | Revised annually | Changes daily |
Pro Tip: Always check your IDV at renewal—it decreases yearly due to depreciation.
How Is IDV Calculated?
Insurers follow this standard formula:
IDV = (Manufacturer’s Listed Price – Depreciation) + (Accessories Value – Depreciation)
Depreciation Rates as per IRDAI
| Car Age | Depreciation Rate |
|---|---|
| ≤6 months | 5% |
| 6–12 months | 15% |
| 1–2 years | 20% |
| 2–3 years | 30% |
| 3–4 years | 40% |
| 4–5 years | 50% |
Example: A ₹10 lakh car after 3 years:
- Depreciation: 40% of ₹10L = ₹4L
- IDV = ₹10L – ₹4L = ₹6 lakh
4 Key Factors That Affect Your IDV
- Vehicle Age
- Older cars = Higher depreciation = Lower IDV
- Make & Model
- Luxury cars depreciate faster than mass-market models
- Location
- Cars in metros may have slightly higher IDV due to maintenance costs
- Accessories
- Non-factory fittings (like music systems) need separate declaration
Warning: Underestimating IDV to save premium? You’ll get lower claims during total loss.
IDV’s Impact on Premiums & Claims
Premium Calculation
- Higher IDV = Higher own-damage premium
- Lower IDV = Cheaper premium but risky coverage
Claim Scenarios
- Total Loss/Theft: Get up to IDV amount
- Partial Damage: Repair costs paid (up to IDV limit)
- Zero Depreciation Claims: 20-30% higher payout than standard IDV
Stat Alert: Cars with correct IDV settle 73% faster than underinsured vehicles (IRDAI 2023 data).
5 Common IDV Mistakes to Avoid
- Selecting Lowest IDV to Save Premium
- Risk: Inadequate claim during total loss
- Ignoring Accessories Value
- Risk: Modified parts won’t be covered
- Not Adjusting IDV at Renewal
- Risk: Overpaying for outdated valuation
- Comparing Only IDV Across Insurers
- Better approach: Check IDV + add-on benefits
- Assuming IDV = Resale Value
- Reality: IDV is typically 10-15% lower than market price
3 Pro Tips to Optimize IDV
- Use Online IDV Calculators
- Tools from Policybazaar, or insurer websites
- Declare All Accessories
- Get endorsements for expensive modifications
- Balance Coverage & Affordability
- Ideal IDV = 90-95% of current market value
Did You Know? Some insurers offer agreed value policies for vintage cars where IDV = mutually fixed amount.
FAQs About Insured Declared Value
Q1. Can I increase my car’s IDV?
A: Yes, during renewal. However, this will increase your premium.
Q2. What’s the IDV for a 10-year-old car?
A: Usually 40-50% of original value. Some insurers cap IDV at ₹50,000 for very old cars.
Q3. How does IDV affect zero depreciation cover?
A: Zero dep claims are calculated on IDV but ignore depreciation deductions.
Q4. Is IDV same for comprehensive and third-party policies?
A: No. IDV matters only for comprehensive (own-damage) coverage.
Q5. What if my car’s IDV is higher than market value?
A: You’re overinsured. Lower IDV at next renewal to save premiums.
Final Checklist for IDV Management
Verify IDV matches current market value (minus depreciation)
Declare all accessories and modifications
Re-evaluate IDV at every renewal
Compare IDV across insurers before buying
Consider zero depreciation add-on for cars <5 years old
Remember: The right IDV ensures you’re neither underinsured nor overpaying. When in doubt, consult your insurer or use online comparison tools.
