We all do plenty of research on models, brands and features etc. while buying a car. And we absolutely love it! But, when it comes to insuring our priced procession, our enthusiasm to know more about takes a back seat. We all should know how important it is to get the right and adequate amount of insurance. Car accidents and its repair can cause a huge financial setback if it is not adequately insured. So, to stay completely protected it’s essential to have a best comprehensive car insurance plan. To choose the right plan at an affordable cost, it’s crucial to understand some of the insurance jargons. IDV (Insured Declared Value) is one of the important terminologies used in car insurance. Let’s get started and understand it in detail.

What is IDV (Insured Declared Value)?

In case of car insurance, IDV is the maximum sum payable by the insurer in case if the car gets stolen or suffers a total loss due to accident. In simple terms, insured declared value is the current market value of your car at the time of buying the car insurance policy. In case of new vehicle, insurer considers the ex-showroom price while calculating IDV. In case of renewal of insurance for old car, depreciation and current selling price of the particular model by the manufacturer is taken into consideration to arrive at IDV figure.

For example, insured declared value (IDV) of your four wheeler is fixed as Rs. 6 lakh at the time of buying car insurance, and then the maximum amount that you are eligible to claim within the policy period is only up to Rs. 6 lakh. Read more about IDV at

Calculation of Insured Declared Value

While computing IDV, you insurer will gather some of the easily available information about your car and use them along with adjusting depreciation as per the standard schedule to arrive at the figure. Here are the few data that are considered:

  • City of vehicle registration
  • Registration date and all the other information as per registration certificate
  • Make and model of the car, manufacturer and year of manufacturing
  • Cubic capacity of your car
  • Ex-showroom Price

Here is the standard depreciation rate chart followed by insurers.

Age of Vehicle

Depreciation Rate

New Car  (within 6 months of purchase) 5%
Between 6 months to 1 year 15%
Between 1 year to 2 years 20%
Between 2 years to 3 years 30%
Between 3 years to 4 years 40%
Between 4 years to 5 years 50%

6th year onwards, depreciation is calculated as per the mutual understanding between insurer and insured. Usually, for cars that are more than 5 year old, IDV is arrived by way of assessing the condition of car and availability of its spare parts.

Significance of IDV (Insured Declared Value)

IDV has a major impact on the determination of your comprehensive car insurance premium, especially for own damage part of the premium. Basically, higher IDV means larger coverage and hence the higher premium. Likewise, if IDV is lesser, extent of coverage is also lesser and thereby it reduces your premium. You may land up in trouble at the time of claim for not knowing the correct IDV of your four wheeler. Hence, it’s vital to know the IDV and quote it correctly instead of understating it. Let see what happens if you do not state the IDV correctly.

  • Declaring Low IDV

If you declare an IDV lower the current market price of your car in order to get your premium reduced, your compensation will also be lower in case of loss or damage. In case your car gets damaged beyond repair in an accident or say it gets stolen then the insurer compensates only up to the limit of IDV. In that case, you will have to shell out the extra money out of your pocket. Hence, understating IDV could get you the right coverage.

  • Declaring High IDV

Don’t be under an assumption that higher IDV declaration can benefit you with higher claim amount. Remember your premium also goes up proportionately. Hence, it’s not a ideal choice to overstate the IDV.

Hence, it’s ideal to get the IDV close to current market value of your car in order to have the right amount of coverage for your valued asset


To sum it up, to get what you expect from the comprehensive car insurance plan its necessary to make the declaration correctly. To make a wise decision you must have a basic understanding of the key elements. Always be informed to make an ideal choice!