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What is IDV

The declared value of the insured is the maximum sum insured fixed by the insurer on the theft or total loss of the vehicle. Basically, IDV (Insurance Declared Value) is the current market price of the vehicle. If there is a total loss to the vehicle, the IDV is the compensation that the insurer will provide to the policyholder.

The IDV is calculated as the manufacturer’s listed selling price minus depreciation. Registration and insurance costs are excluded from IDV. IDVs for goods that do not fit the factory are calculated separately at additional cost if insurance is required for them.

What is IDV

If you are going to get any motor car insurance, then it is very important to have complete information about the side. If we talk in easy words, then the Insurance Declared Value is the current market price of your car. The IDV insurance company will pay the maximum price for your car. That is, in the situation of car accident, breakdown or theft, you can ask for damages from the insurance company equal to IDV

While taking insurance policy, if you have not taken marketable insurance of your car, then the Road accident of the car is bad and fixing it can be a big burden on your pocket. And for better security you need affordable premium. So for this you should know what you are thinking about for insurance.

If you want to know – What is Life Insurance

Standard Depreciation Rate of IDV

Any company adjusts it according to the standard depreciation rate of the Indian motor way to know the insurance declare value.

  1. Complete information of car registration.
  2. There is a car registration on the city where information is available on the certificate
  3. Registration or first purchase.
  4. Make manufacturer variety and model
  5. Information about car
  6. Ex. Show room price with Tax

How to calculate IDV?

The IDV is calculated based on the selling price that the manufacturer decides and depreciation on its vehicle parts is deducted from it. The formula to get the actual insured declared value is mentioned below:

Insured Declared Value = (Company’s listed price – the depreciation value) + (Cost of vehicle accessories – the depreciation value of these parts)

The above-mentioned formula is to calculate the Insurance Declared Value for a new car that is equipped with extra accessories that were added after the purchase of the car. In case you do not have any such accessories in the vehicle, the IDV calculation is simple.  You can easily calculate Insured Declared value of your using the online IDV calculator. And the formula is enclosed below:

IDV = Registered Price of Manufacturers – Value of Depreciation

How to IDV in Insurance Determinate?

The insurance company is determined on the basis of the insurance declare value. This is the reason that as your car becomes older, the premium also decreases. According to IRDA rules, the price of the car’s maximum show room is fixed at 95% Insurance Declared Value. That is, within 6 months of buying the car, the price of the car decreases by 5%.

The Depreciation Schedule to Fix IDV of the vehicle Chart 

Age of Vehicle % Depreciation for Adjusting IDV
Not Exceeding 6 Month 5%
   1 Year 10%
     2 Years 20%
     3 Years 30%
      4 Years 40%
       5 Years 50%

Things to Keep in Mind While Calculating IDV

For the owners, make sure that carefully assess the IDV of their car set their opinion below mentioned points:

  • In the calculating value of your car is derived by deducting the depreciation value from the actual market price. In any case, it is the maximum compensation that you will get in case of total loss or theft of your car.
  • If Insured person want to correct valuation of IDV of a car, may be less premium cost.
  • In the condition reduce the premium, in this condition do not reduce the  of your car. This would mean fewer claims or a disputed claim.
  • Customer get right declaration of Insurance Declared Value, mean you get the rightful claim.
  • You can also do your research or check with the manufacturer before agreeing to the IDV set by your car insurance provider.
  • The car owner get assess the premium cost, check it has been correctly evaluated on the basis of your car’s IDV.

Importance to take care of IDV in car insurance

IDV for New Car

Initially, when you buy a car, its Insurance Declared Value is determined by the listed selling price of the car manufacturer’s brand and model. According to Neetraj Gupta, head (motor insurance), PolicyBazaar.com, said that – The IDV for a new car is reduced by depreciation in the car’s ex-showroom price. The depreciation in a new car is usually 5 % (five percent). Same as the default depreciation of Car is 95 % of the ex-showroom price.

IDV of Car on Exit from Showroom

The IDV starts decreasing as soon as you get the car out from the showroom. In the view fo Mahavir Chopra, Director (Health, Life and Strategic Initiatives), coverfox.com said that – Its IDV falls by 5 % (five percent) in six months from buying a car. The Insurance Declared Value of the car keeps falling continuously and after five years it runs IDV goes up to 50 percent sometimes.

IDV at the Time of Renewal

The premium is calculated at the low price of the car at the time of purchase and renewal of the policy. However as a car owner you are free to declare IDV. In the reference Mr. Chopra said that, while renewing car insurance, the person buying the insurance can convert the car to their IDV. Its limit and maximum cap depends on the insurer.

What can be the difference in IDV?

The depreciation rate of the Insurance Declared Value car is fixed by placing it on a table. Even after that, however, there is scope for this if the car owner wants to change it. Mr. Gupta said – It depends on how much change your insurance company makes. Sometimes it goes up to 15 percent. If IDV 3 lakhs is being offered for the car then you can fix it with Rs. 2.55 lakhs to Rs. 3.45 lakhs.

IDV in case of used cars

If the car is more than five years old or the model that the company has discontinued, its value is decided on the understanding between the insurance company and the owner of the car. Many times the insurer has a problem when renewing the insurance of old cars. On the behalf of Mr. Gupta said that – If it is an ongoing policy, the insurance company cannot refuse to renew it. However, many types of exemptions such as zero deprivation are not available here. In addition the insuring company may carry several charges in addition to the premium.

What do you do? A Suggestion

What will people do if the IDV of the car is different from others insurance companies? In the concept of Mr. Chopra said that – There can be different IDVs for a single car. Along with this, the premium amount can also change. Wherever you get the maximum Insurance Declared Value at the right premium, move and insure from there.

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