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IDV in Car Insurance

Car Insurance Article

What is car insurance?

Multiple factors need to be looked into when choosing a suitable insurance policy for your car, whether at the time of purchase or during subsequent renewals. One of those is IDV.

IDV, which stands for Insured Declared Value, is nothing but the current market value of your car. In case of theft or total damage to your car, IDV is the sum provided to you by the insurance provider. It is usually fixed/determined by the insurance provider. IDV in insurance is one of the major factors which decide the amount of premium you end up paying to cover your car.

How is IDV calculated?

The formula used to calculate IDV in insurance is given below:

IDV= (Manufacturer’s listed selling price - depreciation) + (Accessories not included in listed selling price - depreciation) excluding registration and insurance costs.

So, while calculating the IDV for your car, insurance and registration costs are excluded. Any accessories that do not come as a standard fitting with your car are also excluded. This point should be noted to avoid any misunderstanding or disappointment when you raise a claim.

When you buy a new car, the IDV in insurance policy is equal to 95% of the car’s ex-showroom price provided by the manufacturer. This is because normally the depreciation of a new car is 5%, so when we deduct this from the ex-show room price, we get the above value, i.e., 95%. Over time, IDV is reduced owing to the age of the vehicle and other factors. So, the IDV of a four-year-old car is less than a brand-new car. As we can see, the equation for calculating IDV in car insurance includes the term ‘depreciation.’ This is the reduction of the market value of your car over time.

What are the current depreciation rates?

As per India Motor Tariff, the IDV of your car is adjusted for market depreciation as per the schedule listed below:

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 year to 4 years 40%
4 year to 5 years 50%

If your car is more than 5 years old, the IDV in insurance depends on the condition of the car, manufacturer, model, and availability of its spare parts. Even if your car is an obsolete model, you can still get its IDV value through a mutual agreement with your insurer.


While searching online or offline for renewal of your car insurance, you may come across widely varying quotations of premium. One of the reasons for this may be the lower IDV being offered by the insurance providers. As stated earlier, IDV in insurance plays a part in deciding the final premium you pay for the cover. If you choose to go with an offer which quotes a lesser IDV for your vehicle, you end up paying a lesser premium amount. While this joy is momentary, the real problem arises when you raise a claim for total damage or loss of your car. It is certain that you will be disappointed as you end up getting a much lesser amount as compensation by the insurance provider as the IDV in insurance agreed to be lower than the actual value of the vehicle.

So, it is wise and advisable to keep the IDV in insurance as high as is practically possible and admissible, to avoid any future losses and disappointment. After everything is said and done, it is your hard-earned money that has bought you the car and even its insurance, so it is imperative to ensure that every rupee spent returns a complete value.

It is also not advisable to claim a higher IDV than is rationally accepted, hoping to be compensated heavily in case of theft or total loss of the vehicle. The insurance provider will invariably investigate all such claims, and the disproportionate declaration of IDV will come to light and land you in trouble. If you and the insurer have agreed beforehand on the IDV, then the insurer would not have any reason to deny a claim when it arises, given that the claim is in order.

In the case of car theft, or the expense of restoring the damaged car is more than 75% of the IDV, then the settlement in that case might be equal to the IDV.

So, summing up, it is in your interest to scrutinize the IDV value while buying a new insurance policy for your car or while renewing it, so that you get the best value for the premium you pay and rest assured about compensation in case of theft or total loss of your car.

We at Liberty General Insurance will ensure that you have the best option available for you and your vehicle. Check out Liberty General Insurance’s Car Insurance policy today.


Q. What is the IDV of a car outside the showroom?

The IDV of a new car outside the showroom is not its invoice value, as expected by many. Depreciation is deducted even from the value of a brand-new car as it has been sold for usage once. Since the minimum depreciation rate is 5%, therefore the IDV of a new car standing outside the showroom would be 95% of its invoice value.

Q. What all costs are taken into account while calculating IDV?

The registration and the insurance cost are not included while calculating the IDV. The cost of car accessories not fitted by the manufacturer is also calculated separately when insurance is required for accessories.

Q. Why do sometimes insurance providers reduce the IDV of the car?

The premium rate of an insurance policy directly depends on the IDV of the car. Decreasing the IDV in car insurance brings down the premium amount, thereby attracting customers.

Q. Is there an option to increase the IDV of a car?

Yes, if you are buying a car insurance policy online, you can increase or decrease the IDV of your car. However, it is recommended that car owners use the correct IDV.

Q. How to find the correct IDV of the car?

To declare the correct IDV of your car, you need to do some research on the prices of second-hand cars of the same model and manufacturing year. You can visit various online car portals and check the current market value of those vehicles. This will give you an idea of the ideal IDV of your car. You can also use an IDV calculator online to assess your car’s value.

Q. Where can I find an IDV calculator for car insurance?

The General Insurance Council offers an IDV value calculator for car and two-wheeler insurance. Visit for more details.

Q. What if I understate my IDV in car insurance?

If you deliberately keep the IDV low to spend less on premiums, then your claim amount will fall drastically in case of any losses incurred.

Q. What if I overstate my IDV in car insurance?

Overstating the IDV in order to increase the claim amount will increase your premium amount as well, even when there is no guarantee on whether there would be any situation in future where you would make a claim for the entire IDV. Also, providing inaccurate IDV could lead to a possible decline of your claim.

Q. Is there a difference in how IDV is calculated for commercial and private vehicles?

No. The IDV in insurance is calculated the same way for both commercial and private vehicles. The IDV calculation depends only on the vehicle’s market value and depreciation.

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