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IDV for Car Insurance in India Research Team | Posted On Monday, March 04,2019, 05:57 PM

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IDV for Car Insurance in India



What is IDV?

Insured Declared Value or IDV is the maximum sum assured that the insurer agrees to reimburse you. IDV gives the current value of your insured car.

The IDV of your insured car is Rs 4 Lakhs. What does it mean? Simple, the maximum compensation you get if car is stolen or damaged is Rs 4 Lakhs. Come what may, the insurer will not give you more than Rs 4 Lakhs, as IDV is just Rs 4 Lakhs.

Know the IDV value for car insurance?

The IDV decides the premium of your car insurance. If IDV is high, premiums are high. If you think it’s smart to opt for a lower IDV to save premiums, think again. If your car is damaged in an accident or stolen, you will have to bear the expenses yourself.

SEE ALSO:  Value for Car Insurance

This chart shows the schedule of depreciation to decide car IDV:



Up to 6 Months


6 Months to 1 Year


1 - 2 Years


2 - 3 Years


3 - 4 Years


4 - 5 Years


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IDV for Car Insurance in India

Importance of IDV:

IDV is very important when calculating the own damage part of the car insurance premium. IDV depends on the age and cubic capacity of the car.

Many car owners opt for lower IDV to save on own damage car insurance premium. A lower IDV definitely helps save on car insurance premiums, but in case of an accident, you pay for most of the repairs. If this costs a bomb, there’s only regret.

Calculation of IDV:

How to calculate IDV on car insurance?

Let’s say you bought a brand new maruti car. This car costs Rs 5,50,000. The IDV up to 6 months will be Rs 5,50,000 * 95% = Rs 5,22,500. (Refer chart)

Remember: Even your brand new car has IDV calculated at 95% of total cost. This is 5% depreciation.

What if your car is between 1 to 2 years old?

The IDV will be 80% of Rs 5,50,000 = Rs 4,40,000. This is a depreciation of 20%. (Refer chart)

What if your car is between 3 to 4 years old?

The IDV will be 60% of Rs 5,50,000 = Rs 3,30,000. This is a depreciation of 40%. (Refer chart)

What if your car is more than 5 years old?

The IDV of a car over 5 years (older vehicles) is calculated by mutual agreement between you (insured) and the insurer. An assessment is done by the surveyor, authorized car dealer or authorized used car dealer.

IDV and car insurance renewal:

Let’s take a look at IDV during car insurance renewals. Car insurance premiums are calculated based on the depreciated value of the car. However, as the holder of the car insurance plan, you enjoy the right/liberty to fix IDV. You can alter the IDV when renewing the car insurance plan.

The IDV is fixed based on the depreciation rate shown in the table. However, the insurer allows an change in IDV in the range of plus or minus 15%. If the default IDV is Rs 4 Lakhs, you get to choose an IDV between Rs 3.4 Lakhs and Rs 4.6 Lakhs. Do remember that in case of an accident, you can’t claim the entire IDV. The amount of claim depends on the kind of claim and damage to your car.

When is the claim settlement higher than IDV?

If you and the insurer agree on a higher IDV, there’s no problem with claim settlement. The insurer will not deny the claim, unless it’s done with an intention of fraud.

When is claim settlement equal to IDV?

Let’s say your car is stolen and after months of investigation, the police have not recovered the car. Then, you can make a claim settlement equal to IDV.

You must have read how a huge fire fully destroyed 300 cars at the Aero India 2019 at a parking lot in Bengaluru. Similarly, 176 cars were gutted in a fire at a Chennai parking space. If more than 75% of your car is damaged/destroyed in an accident or a fire, you get claim settlement equal to IDV.

SEE ALSO:  Importance of IDV

Car insurance Companies in terms of claim settlement ratio:

How to choose IDV on car?

Motor insurance claim settlement ratio is the percentage of total claims settled to the total claims received in a financial year.

You have two car insurers. One of them offers an IDV of Rs 3.38 Lakhs on your car, at a premium of Rs 6,909 a year. The other insurer offers an IDV of Rs 2.34 Lakhs on your car, at a premium of Rs 5,823 a year. 

So which one should you choose? You might be tempted to opt for the car insurer which offers the lower premium of Rs 5,823 a year. This is not wise. God forbid if your car meets with an accident, you would get a maximum IDV of Rs 2.34 Lakhs. Any expense beyond this would be out of pocket. By paying a premium of Rs 6,909 (This is just around Rs 1,000 more a year or only Rs 84 a month), you get an additional IDV of Rs 1 Lakh. This amount comes in handy if your car is damaged in an accident.

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