How to calculate correct Insured’s Declared Value(IDV)?

What is Insured’s Declared Value(IDV)?
The insured’s declared value (IDV) of the vehicle will be deemed to be the Sum Insured for the purpose of your car insurance policy and is fixed at the commencement of each policy period for each insured vehicle. For a new vehicle, the IDV of the vehicle (and accessories if any fitted to the vehicle) is to be fixed on the basis of manufacturer’s listed price for the particular make/model/variant at the beginning of the insurance and adjusted for depreciable per schedule below for each renewal year.

How IDV(Insured’s Declared Value) is calculated?
The IDV is determined by the age, model and brand of your vehicle. IDV value will be decreased for each year. It is the value of the amount that is paid to you in case of theft or Complete damage of the vehicle.
THE IDV of any accessories fitted in the vehicle is fixed on the basis of the manufacturers’ listed selling price of the brand and model.
As per IRDA (Insurance Regulatory and Development Authority) the maximum IDV (Insured Declared Value) for a car can be 95% of its ex-showroom price. You can insure your car at this IDV before your car grows older than six months. As the car grows older, the IDV goes down. The value depreciates by 5 percent within six months, for a one year old car the IDV would be 85%, going up to 50 percent for cars aged four years and more. The depreciation schedule is as follows:

Age of Vehicle

% Depreciation for adjusting IDV

Not exceeding 6 months


Exceeding 6 months but not exceeding 1 year


Exceeding 1 year but not exceeding 2 years


Exceeding 2 years but not exceeding 3 years


Exceeding 3 years but not exceeding 4 years


Exceeding 4 years but not exceeding 5 years


The schedule of age wise depreciation as shown above is applicable for the purpose of Total Loss/ Constructive Total Loss claims only.

How to calculate correct IDV(Insured’s Declared Value)?
IDV is calculated as manufacturer’s listed selling price minus depreciation. The registration and insurance cost are excluded from IDV. The IDV of the accessories which are not factory fitted, are calculated separately at extra cost if insurance is required for them.

IDV= {[(Manufacturer’s listed selling price or Ex-showroom price) + (Sales Tax) + (Accessories that are not included in listed selling price - depreciation)] – (Depreciation + Registration costs + Insurance costs)}

What about the vehicles >5 years of age?
IDV of the vehicles beyond 5 years of age and of obsolete models of the vehicles (i.e. models which the manufactures have discontinued to manufacture ) is to be determined on the basis of an understanding between the insurer and the insured/proposer. Instead of depreciation, IDV of old cars is arrived at by assessment of vehicle’s condition done by surveyors, car dealers etc.

Why IDV(Insured’s Declared Value) is important?
IDV is the maximum amount that you can claim under a motor insurance policy to compensate for any loss arising from theft or accident. IDV is treated as the ‘market value’ throughout the policy period without any further depreciation, for the purpose of Total Loss (TL) or Constructive Total Loss (CTL) claims. So, if you suffer total loss in an accident of your three-year-old car that is worth Rs 4 lacs at the time of the accident, under no circumstances will you be compensated for more than Rs 4 lacs. Less IDV would attract less premium.

What is Total loss/Constructive Total Loss (CTL)?
The insured vehicle shall be treated as a Total Loss (TL)/Constructive Total Loss (CTL), if the aggregate cost of retrieval and / or repair of the vehicle, exceeds 75% of the IDV of the vehicle.