IDV, or Insured Declared Value, is the single most important number in your car insurance policy — it sets the maximum the insurer will ever pay. This guide explains what IDV means, how IRDAI's depreciation schedule calculates it each year, the risk of setting it too low, and how to get it right.
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IDV (Insured Declared Value) is the current market value of your vehicle agreed with the insurer when you buy or renew. Legally, it is the manufacturer's listed selling price minus depreciation based on the car's age. IDV is the cap on what the insurer will pay: if your car is stolen and never found, you get the IDV; if it is totalled (repair cost above 75% of IDV), you get the IDV minus salvage value.
IDV also drives your premium. Insurers apply an own-damage rate — typically 1.5% to 3% of IDV — so a higher IDV means a higher premium but a better total-loss payout, and a lower IDV means the reverse.
IRDAI prescribes a standard depreciation schedule applied to the ex-showroom price:
| Vehicle age | Depreciation |
|---|---|
| Up to 6 months | 5% |
| 6 months–1 year | 15% |
| 1–2 years | 20% |
| 2–3 years | 30% |
| 3–4 years | 40% |
| 4–5 years | 50% |
Above five years there is no fixed formula — IDV is mutually agreed, so check current resale prices before accepting the insurer's offer.
Many portals let you adjust IDV within a band to reduce premium. But if you insure a ₹5.5 lakh car for ₹4 lakh and it is stolen, you lose ₹1.5 lakh to save a few thousand rupees — rarely a good trade. Setting IDV too high is equally pointless: under the principle of indemnity, the insurer still pays only the market value at the time of loss.
For electric vehicles the battery is usually included in IDV for integrated-battery models. A factory-fitted CNG kit is part of the standard IDV; an aftermarket kit must be declared separately. For a financed car, your IDV should be at least equal to the outstanding loan. To see how IDV interacts with cover types, read the comprehensive vs third-party guide, the pillar car insurance guide, and the zero depreciation add-on.
A higher IDV means a higher maximum payout in a total loss and a slightly higher own-damage premium. It does not make the policy better for partial repairs, add-ons or claim service. Also compare the insurer's claim settlement ratio, cashless network and add-on options.
Generally IDV is fixed for the policy term and changed only at renewal. Some insurers may allow a mid-term endorsement, but this is uncommon. Plan your IDV carefully when buying or renewing the policy.
IRDAI's schedule applies 15% depreciation in the first year, 20% in the second, 30% in the third, 40% in the fourth and 50% in the fifth. After five years, IDV is agreed between insurer and policyholder, typically based on current resale prices.
IDV is the insurer-calculated value for total-loss claims, based on the listed price minus IRDAI depreciation. Resale value is what a buyer actually pays, factoring in demand, condition and service history. Setting IDV close to real resale value ensures a fair claim settlement.
A factory-fitted CNG/LPG kit is part of the standard IDV. An aftermarket kit fitted after purchase must be separately declared and insured, requires an RC endorsement from the RTO, and attracts a small additional third-party premium for the kit.