How To Find The Correct IDV For Your Car Insurance?
3 min read
・Jul 30, 2024
When buying car insurance, there are multiple factors you must consider. One crucial factor is the Insured Declared Value (IDV). The IDV value affects the coverage of your car insurance as well as the premium you’ll have to pay for it.
In this article, we’ll determine what IDV is and how you can determine this value accurately when purchasing or renewing a vehicle insurance policy.
What Is IDV In Car Insurance?
The IDV value is the current market value of your car. For example, if you bought a car worth ₹7 lakhs a year ago, its IDV might be ₹5 lakhs in the current year after factoring in depreciation and regular wear and tear.
The insurance provider fixes it and is the maximum sum insured you will receive from them in case of total damage beyond repair or theft of your car. However, you can choose your IDV while purchasing car insurance.
How To Calculate The IDV for Car Insurance?
The IDV of a car depends on the manufacturer’s selling price and its depreciation. It also depends on any add-on accessories you may have purchased. Here’s how you can determine the correct IDV for your vehicle insurance:
- With accessories :
IDV = (manufacturer’s selling price – depreciation cost) + (accessories cost – depreciation of these accessories).
- Without accessories :
IDV = manufacturer’s selling price – depreciation cost.
Factors That Determine The IDV Of A Car
Besides the selling price, insurance providers also consider the following factors when calculating the IDV of a car:
- Age of the Car
The age of a car significantly affects its IDV. An older car will have a lower IDV than a brand-new one. This is because, with time, the car’s value depreciates due to wear and tear. Factors like mileage and the vehicle’s condition further reduce the IDV over time.
- Type of Car
The IDV of a car depends on its type: sedan, hatchback, SUV, or MUV. Hatchbacks are generally more compact and cost-effective than sedans and SUVs, which means they’ll also have a lower IDV. On the other hand, SUVs and MUVs are known for their high performance and robust build. As a result, they’re often priced at a higher value, which automatically increases their IDV.
- Car Model
Different models of the same car can also have different IDVs depending on the manufacturer and features. Base models have limited features and are cheaper than the high-end models. As such, they also have lower IDVs.
- Location of Purchase
The ex-showroom price of the same car varies for different locations. This is due to different states’ varying taxes and registration fees. For example, Karnataka has the highest road tax in India at 14.43%, with Himachal Pradesh having the lowest at 2.5%. This influences the overall cost of the car and, consequently, its IDV.
- Depreciation
Your car’s value depreciates over time. If you bought the car for ₹7 lakhs two years ago, its value will not be the same today. Since IDV is based on your car’s current value, depreciation is also considered when calculating this value. This depreciation rate is fixed by the Insurance Regulatory and Development Authority of India (IRDAI).
| Age of the vehicle | Depreciation % |
| <6 months | 5% |
| >6 months but <1 year | 15% |
| >1 year but <2 years | 20% |
| >2 years but <3 years | 30% |
| >3 years but <4 years | 40% |
| >4 years but <5 years | 50% |
6. Car Insurance Add-ons
The IDV of the car also depends on any additional accessories that are not included in its selling price. If you’ve purchased accessories that enhance the car’s value, they are considered separately as car insurance add-ons when calculating the IDV.
Benefits And Drawbacks of A High/Low IDV
The IDV directly influences the premium of your car insurance. Hence, it’s important to calculate the IDV value accurately to ensure you’re paying a fair premium and your vehicle is covered optimally. Here are some car insurance benefits and drawbacks of a high/low IDV:
| Nature of IDV | High IDV | Low IDV |
| Advantages | A higher IDV ensures you’ll receive higher compensation when claiming theft or total loss of your car. | A lower IDV comes with lower premiums. |
| Disadvantages | You’ll have to pay a higher premium for your car insurance. | Your vehicle insurance policy will have a lower sum insured, which means you’ll receive lower compensation when claiming theft or total loss of your car. |
Key Takeaways
Determining the correct IDV for car insurance is crucial to ensure it is covered optimally and you receive a fair amount when making a claim. You can visit the official website to compare car insurance benefits from different providers and buy affordable plans that offer the best coverage for your car.
Consider platforms like PhonePe for a seamless and hassle-free insurance purchase experience.
Frequently Asked Questions
Does PhonePe help their customers to find the correct IDV for their vehicle ?
Is it a good idea to increase the IDV value of my car while purchasing a car insurance policy ?
Are there any online IDV calculators that can help calculate the optimum IDV for my car ?
Can the IDV for the same vehicle vary from insurer to insurer ?
Is IDV of a car affected by factors like geographic location or the owner’s driving patterns?
