How to Calculate IDV for Your Car and How it Affects Car Insurance

Finding out your vehicle’s IDV can be confusing. Read on to clear your doubts

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Over time, all assets depreciate in value. Cars and two wheelers are subject to wear and tear, which brings down their market value. Vehicle insurance provides depreciation rates in accordance with Motor Tariff regulations.

The insured declared value, commonly known as IDV, is the maximum amount that the car insurance company will pay in case of theft, accident, or damage to your car or two wheeler. In simple terms, it is the present market value of your motor vehicle. The IDV decreases as your car or two wheeler gets older.

Calculating the IDV

The IDV is based on the manufacturer’s selling price at the time of buying or renewal of vehicle insurance, and is adjusted for depreciation. However, you need to remember that the car insurance expenses and registration cost are not included in the IDV calculation. Moreover, if you have additional accessories that are not company-fitted, the costs of these are not included in the IDV. You will have to pay an extra cost for procuring coverage for such accessories.

Depreciation schedule

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If your car or motorbike is over five years old, the IDV is calculated based on the serviceable condition and the state of its various body parts. But what if the vehicle is more than five years old and the model is discontinued by the manufacturer? Well, in such a case, the IDV is mutually agreed upon by the vehicle insurance provider and you. Some car insurance providers may hire a professional surveyor to calculate the IDV, which may increase the cost of the motor insurance policy.

Why is IDV important?

The IDV is the maximum compensation you will receive from the car insurance company in case of an accident or damage. Therefore, it is very important to determine a rational and mutually agreeable value. It must be as close to the market value as possible to ensure you receive the compensation as deemed accurate.

The relation between IDV and premium

The IDV is one of the most important factors that will determine the bike insurance or car insurance premium. If the IDV is low, the vehicle insurance premium is also low, and vice versa.

Declaring a low IDV

While a lower IDV means that you pay a lower premium, while making claims you will receive the claim amount lower than your expectations. In certain cases, the expenses incurred on your car damage can be more than the IDV you receive, which means that you may have to spend a significant amount on repairs.

Declaring a high IDV

If declaring a low IDV is not good in the long term, so is declaring a high IDV. Your claim settlement process can be impacted significantly if your IDV is more than the market value of your vehicle.


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The Trade Name "DHFL" belongs to Dewan Housing Finance Corporation Limited and used by DHFL General Insurance Limited under license.
COCO (By DHFL General Insurance) is the Trademark used by DHFL General Insurance for its digital platform.