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Key Highlights
- Learn everything about IDV in insurance, such as IDV value meaning.
- Find out what IDV stands for, vehicle IDV full form, and more.
- Learn how to calculate the IDV of a car and use the IDV value calculator for a car.
Have you just bought a car and are not sure which car insurance policy to buy? With multiple options to choose from, finding the right car insurance can often seem like a daunting task. However, you must note one crucial aspect that decides a car insurance policy premium and affects the insurance claim - the Insured Declared Value or IDV in insurance.So, what is IDV in insurance? How to calculate the IDV of a car? Read on for a detailed explanation of what IDV in insurance means and how to calculate IDV for car insurance.
What is IDV in Car Insurance?
IDV stands for Insured Declared Value (IDV) and denotes your car's current market price. IDV in insurance policy is the maximum sum insured on your car and is the highest insurance amount provided by your insurance provider.The IDV in insurance is usually calculated in case of theft or damage beyond repair. it is declared by the car owner while insuring it and directly impacts the payable premium. A higher the IDV in insurance, the higher the premium.
How to calculate IDV for car insurance?
The selling price of a car at any particular point is decided by the car manufacturer, which forms the basis of the IDV calculation. So, it is important to know how to calculate the IDV for car insurance.To calculate the IDV in insurance, depreciation on the vehicle parts is deducted from the estimated selling price. The formula for calculating the IDV is: Insured Declared Value of Car = Manufacturer’s Listed Price - Depreciation Value You must also deduct the cost of fuel as well as maintenance costs to determine the IDV in insurance.If you have added any accessories in your car after purchase, you can use the formula mentioned below to calculate the IDV in insurance: Insured Declared Value of Car = (Manufacturer’s Selling Cost - Depreciation Value) + (Cost of Vehicle Accessories - Depreciation Value of Vehicle Accessories) The car owner should calculate the insurance value of the car and obtain an estimate of the IDV from the car manufacturer before deciding the final IDV in insurance as suggested by the insurance provider.The true valuation of a car’s IDV in insurance will result in a lower car insurance premium. It will also result in a rightful car insurance claim settlement.For cars that are over five years old, the IDV in insurance is mutually decided by the insurer and the car owner. The car's condition and survey report of the surveyor is also accounted for while calculating the IDV in insurance for old vehicles.
Various elements on which a car’s IDV in insurance is calculated
A car’s IDV in insurance is calculated based on the following specifics:
- Car’s registration details
- The location where the car was registered
- Showroom price of the car
- Car’s registration date and type
- Make and model of the car
- Engine cubic capacity of the car
How to determine the market value of a car?
A car’s market value is based on its make and model, variant, age, etc. Initially, the car manufacturer determines the vehicle's IDV without deducting depreciation and the buyer declares the IDV when buying or renewing its insurance. Knowing these values are essential for calculating the IDV in insurance. Also Read: Planning to buy a car insurance? Here’s everything that will help you decide the best option for you
What are the current depreciation rates to calculate the IDV in insurance of a car?
The Insurance Regulatory and Development Authority of India (IRDAI) has set the standard depreciation rates for a car which should be used for the IDV in insurance calculation.The IDV in insurance is calculated based on a car’s age for the first 5 years. You can check the IDV calculation rates as per IRDAI listed below to find out how to calculate IDV of a car:
| Age of the car | Depreciation rate |
| 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% |
IDV in insurance: Making car financing easier
Now that you know what is IDV in car insurance, how to calculate IDV of a car, and more, you will be able to find out the correct value of your car's IDV without hassle. Simply refer to the table above and follow the formula to calculated the car IDV, meaning the insured declared value. Also Read : What is the Motor Insurance Claim Procedure if You Damage Your Car?
FAQS - FREQUENTLY ASKED QUESTIONS
What is the ideal IDV in insurance for a car?
The ideal IDV in insurance is the approximate market price of the vehicle at that given point of time. The IDV should be enough to cover total loss or damage due to theft or any mishap.
Can I increase the IDV of my car?
Yes, if you are buying a car insurance policy online, you can increase or even decrease the IDV of your car.
How to calculate IDV of a car?
The IDV is calculated as per the following formula:
Insured Declared Value of Car = Manufacturer’s Listed Price - Depreciation Value
Or,
Insured Declared Value of Car = (Manufacturer’s Selling Cost - Depreciation Value) + (Cost of Vehicle Accessories - Depreciation Value of Vehicle Accessories)
What is the full form of IDV?
IDV stands for Insured Declared Value. It is important to know how to calculate IDV for car insurance.
Will the location of purchase have an impact on the IDV of my car?
Yes, the IDV of your car may increase or decrease based on its ex-showroom price as it can differ as per location.
Does a new car’s IDV fall as soon as I take it out of the showroom?
The car’s IDV falls as soon as the car is taken out of the showroom because depreciation is taken into account when calculating the car’s IDV.
Can I understate my IDV in car insurance?
If you keep the IDV low to spend less on premiums, then your claim amount will also fall in case of any losses.
What happens if I overstate my car's IDV?
If you overstate your car's IDV, it can also lead to a higher insurance premium. Doing so is discouraged as any discrepancy can lead to rejection of your insurance claim.
Is IDV calculation different for private and commercial vehicles?
No, the formula to calculate IDV for both private and commercial vehicles remains the same.
How can I use an IDV value calculator for car insurance?
You can visit the General Insurance website to use the IDV value calculator for car insurance.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
