What is IDV in Car Insurance?

IDV stands for Insured Declared Value and it represents the maximum claim amount you can receive in case of total loss or theft of the vehicle. It is the current market value of your car, factoring in the depreciation. 

The IDV plays a huge role in deciding the premium you will have to pay, and the amount for which your car is insured. Thus, let’s look at what IDV means in car insurance.

How to Calculate IDV for Car Insurance?

The formula for calculating the Insured Declared Value (IDV) in car insurance is:

IDV = (Ex-showroom Price of the Car - Depreciation Value) + (Accessories - Depreciation Value)

Where, the ex-showroom price is the price set by the manufacturer, excluding registration, insurance, and other costs. The depreciation value is calculated based on the age of the vehicle and other factors. 

Current Depreciation Rates

The depreciation rates of vehicles is an important factor that affects the IDV. The following are the general depreciation rates - 

Important Points to Remember About the IDV

Since the Insured Depriciation Value is an important factor for car insurance, you should understand it thoroughly. Here are some important points to keep in mind about the IDV - 

• The IDV is calculated based on the manufacturer’s listed selling price.

• The IDV doesn’t include registration and insurance costs.

• Add the values of the accessories and their depreciation value separately.

• You cannot get an amount higher than the IDV at any condition.

• Different insurance vendors might have different IDVs. Compare the policies offered by the top car insurance companies in India before deciding on one.

• You must consider your IDV every year while renewing your insurance policy.

• You can negotiate the IDV value with your insurance provider.

• If you have bought a car on EMI, the correct IDV will help with insurance payout in case of loss of your vehicle.

• The IDV depends on the make, model, age, and type of car. It also depends on the accessories you have added and the place of registration.  

Why is the IDV Important?

As mentioned earlier, the IDV plays an important role in deciding your insured amount and payout. Here are some things that the IDV directly impacts -

• Determines the claim amount at the time of accident or loss of car

• Impacts the premium amount you have to pay.

• Shows the current market value of your car.

• Affects policy renewal as the value depriciates every year.

Conclusion

Knowing about the IDV value for car insurance is crucial for making informed decisions about your car insurance policy. It determines the maximum claim amount in cases of total loss or theft and also influences the premium you pay. If the cost of restoring your car after an accident is more than 75% of the IDV, the settlement might be equal to the IDV.

Please note that a higher IDV will lead to higher premium amounts but your claim amount will be high as well. But it is not advisable to claim an impractical IDV just to be compensated in case of an accident. Thus, keeping the IDV balanced will safeguard you from extra spending if you get in an accident.