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The Insured Declared Value is the amount that the owner is entitled to receive for loss or damage of the insured vehicle. Simply put, the current market value of the car is referred to as the Insured Declared Value.

There are various factors which determine the IDV of a certain vehicle such as the age, model, brand and the availability of spare parts of the car.

For instance, if the IDV of your vehicle is fixed to be INR 6 Lakhs at the inception of the policy, Insured Declared Valueyour insurance provider will be liable to compensate you for a maximum of INR 6 Lakhs if your car is stolen or damaged beyond repair. 

IDV in Car Insurance

In a car insurance policy, the Insured Declared Value or IDV is the value of the car. The IDV is a determining factor when it comes to the amount that the car owner can claim in the event of loss or damage owing to an unfortunate incident.

Why Is It Important To Declare Correct IDV?

The cost of repairs of damage or loss involving a car accident can easily run to four digits. Not having the right amount of insurance to back you up can be a financial menace. Hence, you should not only have an insurance policy for your beloved car but also make sure that it covers you well enough. This is where IDV comes to play. 

IDV is the main factor determining the number of premiums for your car. Generally, the premium is 2-3% of the IDV. Therefore, the higher the IDV, higher will be the amount for the premium. In fact, it is wiser to declare a high IDV and pay a higher premium on the assumption that the amount of claim will be higher if unfortunate things come to pass. Many car owners choose to declare higher IDV for their vehicle estimating that they would get a price higher than the market value should they sell the car. 

However, it is best to fix an IDV which is as close to the market value of the car as possible. 

How is IDV Calculated?

The manufacturer's listed selling price bears the major weightage in determining the IDV of the car. The IDV of your car will be calculated at the time of purchase of the insurance plan or at the time of renewal, taking into consideration the depreciation for the year. IDV will also include the value of accessories fitted into the motor. 

The depreciation schedule of the Insured Declared Value is given in the table below:

Age of the Car

Depreciation as Percentage 

0 to 6 months 


6 months to 1 year


1 year to 2 years 


2 years to 3 years 


3 years to 4 years 


4 years to 5 years


The formula given below is an answer to how to calculate insured declared value

IDV = [(Manufacturer’s selling price + sales tax + (amount of accessories not included in the manufacturer’s selling price – depreciation)] – depreciation + cost of registration 


Say you bought a car in Jan 2018 at Rs. 10 Lakhs and the market price for the same model and make in 2020 stands at Rs. 12 Lakhs. The IDV shall be calculated taking into consideration the present market value of the car less the depreciation (rated at 30%). 

Also Read: Comprehensive Handbook on No Claim Bonus for Car Insurance

How is IDV Calculated For Vehicles That Are More Than 5 Years?

After 5 years, the car’s IDV is calculated after taking into consideration its age, the number of miles covered and condition. The policyholder and the insured must mutually agree on deciding the IDV of the car. Since the IDV depreciates with the value of the car, one must avoid taking expensive insurance for more than 5 years. 

IDV During a Car Insurance Renewal

At the time of the renewal of car insurance policy, the IDV of the car is calculated taking into consideration the accumulated depreciation for the year. However, the holder of the policy also has the liberty to alter the IDV of the car. It is recommended that the policyholder keeps the IDV as accurate as possible. While a higher IDV is not an impediment to claim settlement, it is best to keep the IDV well within the limits. 

There are two cases where the insured pays the entire IDV as a claim. First, if the car is stolen. Second, the damage to the car equals 75% of the IDV. The IDV value fixed differs from one insurance service provider to another. Therefore, one must settle with an insurance company that offers maximum IDV at a reasonable premium cost. 

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1. Can I negotiate with my insurer to fix a higher IDV? 

Yes, you and your insurer can mutually agree to settle on a higher IDV for your car. Higher IDV results in paying a higher amount of premium which leads to the increase in sum assured which ensures that your car is well secured from unforeseen circumstances leading to damage or loss. 

2. How can I calculate the IDV for a car which is not equipped with any additional accessories? 

If your car does not include any additional accessories, the calculation for the IDV is simple. Subtracting the amount of depreciation from the manufacturer’s listed price will give you the Insured Declared Value of the car. The percentage of depreciation is as per the table given above. 

3. Can I calculate the IDV for my car online? 

Yes, you can calculate the IDV of your car online. There are various websites that allow you to calculate the IDV for free. All you need to do is select the correct variable inputs to get an accurate IDV. 

4. Can I get a higher resale value on declaring higher IDV?

There are various factors other than IDV that go into determining the resale value of car insurance. Therefore, declaring higher IDV is not a surefire way to increase the resale value of the car. 

5. Does my location have an impact on my car’s IDV?

Yes, the city where your car is registered impacts the IDV of the car. The IDV of a car in a metro city is much less than the IDV of the car in a tier II city. 

Naval Goel is the founder of He is an Associate Member of the Indian Institute of Insurance`, Pune. He has been authorized by IRDA to act as a Principal Officer of Insurance Web Aggregator.
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