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Why Evaluation Of Right IDV Is Required While Buying Car Insurance?

Every time when you try buying a new car policy or renewing an existing one a lot of offers being put forward to us from insurers, financial advisors and online comparison websites but the astonishing part of all these offers is that the premium prices on offer are always different even if it is for the same policy from the same insurer. But why is this phenomenon? This is one of the common scenario where policyholders end up buying car insurance plans motivated by lower premiums. But one should remember a lower premium means a low insured declared value (IDV).


The question now that need to be first answered is what is the correct value of IDV one should consider and why IDV  is so important? Let’s first understand what actually is Insured Declared value. From a car insurance perspective it is the amount of money for which your car is insured and it forms the basis of claim settlements in event the car is stolen or damaged beyond repair due to accident. Selection of the correct amount of IDV is important because the same define the maximum amount of claim which would be settled by the insurer.So in a case you are buying car insurance policy because it charges a low premium beware of the effects it would have on a later stage of claim processing.

IDV for a new car

At the point when you are buying a new car , the manufacturer’s listed price is the IDV but once bought and brought to road the value depreciates by at least 5% as per IRDA guidelines.So at any point when you a policy for a new car you should always keep in mind the default is always 95% of the on road price of the car.

Standard depreciation rates for calculating IDV


Age of the vehicle

% Depreciation for IDV

Not exceeding 6 months


Exceeding 6 months but not exceeding 1 year


Exceeding 1 year but  less than 2 years


Exceeding 2 years but less than 3 years


Exceeding 3 years but less than 4 years


Exceeding 4 years but less than 5 years



IDV during policy renewal:

At the point of car insurance policy renewal depreciation is a factor that defines the IDV of the car. The maximum IDV is always 50% of the manufacturer’s price at which the policyholder has brought the car.It is not like that insurer is the only person who sets the IDV when the policy is renewed but even the policyholder has a leverage to set an IDV 15% more or less what is arrived after depreciation. Once an IDV is accepted by the insurer, the policyholders hold the right to claim till the value of IDV.