Insured Declared Value (IDV) of the car is a vital factor that is calculated by the insurer at the time of car insurance renewal. The IDV is the market value of the car or in technical terms, it is the maximum sum assured payable by the insurer for total loss or damage of the vehicle. If the car gets stolen and cannot be traced, the insurer will pay the IDV of the car depending on age and depreciation percentage applicable for the car.
IDV = (Manufacturer’s listing price – Depreciation) + (Accessories and extra fittings if any – depreciation)
|Insured Declared Value in % (ex-showroom value)||Age of the car|
|50||4 - 5 years|
|60||3 - 4 years|
|70||2 - 3 years|
|80||3 - 4 years|
|85||6 months - 1 year|
|95||0 - 6 months|
While calculating the premium amount for every subsequent year of renewal, IDV plays a main role and this is applicable only for comprehensive cover. From the above table, you can see that, IDV depends on the age of the vehicle. So if your vehicle is only 1 year old, the IDV of your vehicle will be 85% of the ex-showroom value of the vehicle.
If you opt to declare lower IDV to pay lower premium amount, please know that you are essentially decreasing the market value of your car. This, also means that when you claim the insurance for any damage, the claim settlement amount will also be low and you will end-up paying more from your pocket. However, if you declared higher IDV, this will affect while you either claim the insurance or when you sell the car. If you are selling the car, quoting higher IDV may backfire you. If you declare an higher IDV at the time of selling your car, the buyer may not be ready to pay higher than the market value, and if you are declaring a higher IDV, you will also be paying higher premium and higher deductibles while claiming. However, the claim settlement will be paid by the insurer according to the actual market value of the car.
|Percentage of Depreciation||Age of the vehicle|
|5||0 - 6 months|
|15||6 months - 1 year|
|20||1 - 2 years|
|30||2 - 3 years|
|40||3 - 4 years|
|50||4 - 5 years|
Only by declaring the correct IDV, will you be able to get the right price for your car while selling it and a suitable insurance compensation at the time of total loss.
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