IDV or Insured Declared Value is the current value of the car where the owner of the car declares the value while purchasing the car insurance or while renewing the car insurance and also IDV of the car and the premium are linked to each other. Since the car’s value depreciates at the time when the purchase is done. If the owner sets the value of the IDV as high, the cost of the premium will also increase and while setting the IDV as low, will decrease the cost of the premium. It is ideal for the owner of the car that he sets the IDV approximately equal to the current market value of the car.
Therefore, IDV generally refers to the maximum claim the insurance company provides you during any serious damages of the car or it is stolen. So, if the market value of the car is Rs 8 lakh during the time of purchase of the policy. This tells you that the insurance company provides you with a maximum amount of Rs 8 lakh. IDV is the amount that your car could receive during the claim in today’s market.
How to calculate IDV?
The IDV is ideal for insurance companies to not only know the market value of the car but also to know the correct amount of premium that policyholder should be paying. This is the most important insurance tool.
This further helps the insurance company determine the amount to pay during the claim process in case if the car is beyond damaged or stolen.
The depreciation rates of the car:
| Age of the Car | Depreciation % |
| 6 months and below | 5% |
| 6 months to 1 year | 15% |
| 1 year to 2 years | 20% |
| 2 years to 3 years | 30% |
| 3 years to 4 years | 40% |
| 4 years to 5 years | 50% |
For example,
- If your car’s age is less than 6 months old and your car’s ex-showroom price is Rs 1000/- the depreciation rate is 5% and your IDV drops to Rs950.
- If your car’s age is between 6 months to 1 year and the depreciation rate 15% and your IDV drop to Rs850.
- If your car’s age is 1- 2 years and the Depreciation rate is 20% and your IDV drops to Rs 800.
- If your car’s age is 2-3 years and the depreciation rate is 30% and your IDV drops to Rs 700
- If your car’s age is 3-4 years and the depreciation rate is 40% and your IDV drops to Rs 600.
- If your car’s age is 3-5 years and the depreciation rate is 50% and your IDV drops to Rs 500.
If your car is more than 5 years old then IDV depends on the condition of the car the manufacturer, model, availability of spare parts, etc.
Factors to determine the car’s IDV
- Age of the car
- Manufacturer, make and model of the car
- City registration details
- Date of registration of the car
- Standard Depreciation
- Cubic capacity and ex-showroom price of the vehicle.
