What is IDV in Car Insurance?

Multiple factors need to be looked in while buying a car Insurance policy, the important one being IDV which is the short form of Insured Declared Value.

An IDV is nothing but the market value of your car. In the event of total damage or theft, it is the value that the company will provide the insured. It is usually fixed/determined based on a number of factors. IDV is one of the important components that will determine the premium that you will have to pay for car Insurance policy.

How is IDV calculated?

The Formula for calculating the IDV is mentioned below,

If you have no accessories added then IDV = Car’s Ex-showroom price – depreciation

For accessories added, IDV = (Ex Showroom price – depreciation) + (Cost of accessories – Depreciation)

Depreciation rates in a Car Insurance

Life of Vehicle****Depreciation ratioNot more than 6 months5%6 months  - 1 Year15%1 Year – 2 Years20%2 Years – 3 Years30%3 Years – 4 Years40%4 Years – 5 Years50% Just input the age of your car in the IDV Calculator, and you can get to know about the IDV of your car precisely.

Factors that affect the IDV of your vehicle

IDV of the vehicle is dependent on several factors, some of these include:

• Type of Car: Various types include hatchbacks, SUV or sedans. All these variants have different values
• Make and Model of Car: Make and Model of your car has a direct influence on your IDV
• Age and Depreciation: The older your car, these lesser would be the IDV and viceversa
• Place of registration: The location where your car is registered also plays a vital role in determining the IDV. The ex-showroom prices may be different across various towns
• Accessories fitted  in the car: The accessories fitted in your car and their depreciation have  a considerable effect on the IDV

What happens if I choose a lower IDV?

You can select the IDV of your choice while buying car insurance. However, remember that when you opt for a low IDV, it will affect the payout of your policy in case of theft/total loss of your car. A lot of people opt for Low IDV for the sake of low premium, without knowing they will receive less compensation in case of Total Loss

Similarly, when you opt for Higher IDV, the premium for your car insurance policies would also increase. The high sum insured can come to your aid in the event of total loss/damage to your cars.