Home›Glossary›IDV

IDV

General

Insured Declared Value

The current market value of a vehicle as determined by the insurer, used to set own-damage premiums and as the maximum payout in a total-loss or theft claim.

Definition

IDV is the maximum amount an insurer will pay out if your car is stolen or damaged beyond repair, calculated as the vehicle's current market value after depreciation. It's set using the manufacturer's listed selling price, adjusted down each year based on a standard, insurance-regulator-prescribed depreciation schedule.

IDV directly drives your own-damage premium, since that portion of your policy is priced as a percentage of IDV. It's a separate concept from zero depreciation cover, which affects repair claim payouts rather than total-loss payouts.

Formula

IDV = (Manufacturer's Listed Price − Depreciation Based on Vehicle Age)

Standard depreciation percentages typically range from 5% for a car under 6 months old up to 50% for cars 4-5 years old, per IRDAI guidelines.

Worked Example

A car with a manufacturer's listed price of ₹10,00,000, now 2 years old, with a standard depreciation rate of 20% for that age band:

  • IDV = ₹10,00,000 × (1 − 20%) = ₹8,00,000

If the car is stolen or totaled, ₹8,00,000 is the maximum the insurer will pay, regardless of what was originally paid for the car including accessories or on-road costs.

Key Things to Know

  • IDV falls every year at renewal, following a fixed depreciation schedule. This is separate from any damage-related wear, it's a standard age-based adjustment applied uniformly.
  • Own-damage premium is priced as a percentage of IDV. A lower IDV means a cheaper premium, but also a lower maximum claim payout.
  • IDV caps total-loss and theft claims, not repair claims. Repair claim payouts depend on actual part costs and depreciation deductions, which is where zero depreciation cover comes in separately.
  • Setting IDV artificially low to save on premium is a common but risky shortcut. It directly reduces what you'd receive if the worst-case scenario happens.
  • Accessories usually need separate IDV declaration. Non-standard fittings aren't automatically included in the base IDV calculation unless declared and insured separately.

Related Terms

Zero DepreciationZero Depreciation Cover (Bumper-to-Bumper Cover)

Frequently Asked Questions

Can I set my own IDV when buying insurance?
Within limits, yes. Insurers calculate a standard depreciation-based IDV, but many allow you to adjust it slightly up or down within a permitted range, keeping in mind that a lower IDV means a lower premium but also a lower payout.
Why does setting IDV too low seem tempting?
A lower IDV reduces your premium since own-damage cover is priced as a percentage of IDV. But it also caps what you'd receive in a total-loss or theft claim, so it's a real tradeoff, not free savings.
How is IDV different from the price I paid for the car?
IDV reflects the manufacturer's listed price adjusted for depreciation based on the vehicle's age, not what you personally paid, which might have included discounts, accessories, or on-road costs.
Does IDV decrease every year automatically?
Yes, insurers apply a standard depreciation schedule each year at renewal, so IDV steadily declines as the car ages, following IRDAI-prescribed depreciation percentages.
Does a higher IDV always mean better protection?
Generally yes for total-loss scenarios, since it raises your maximum claim payout, but it also raises your premium proportionally, so it's about matching the IDV to the vehicle's realistic replacement cost, not simply maximizing it.