Insured Declared Value in motor insurance cover: How is it calculated, is lower IDV better?

What is Insured Declared Value?
In vehicle insurance, insured declared value is the maximum amount that the insurer will pay you in case of theft or total loss of your car or bike. In other words, it is the highest compensation that you will receive from the insurance company if your vehicle is damaged beyond repair.

This amount is decided on the basis of the vehicle’s original sale price set by the manufacturer and its subsequent depreciation. So if your car is new, the IDV will be higher, and as it ages, this value will fall. Besides the vehicle’s age, IDV also depends on its type, the city where it’s registered, and the accessories used.


The registration and insurance costs are not included in IDV calculation. IDV is only available for comprehensive car insurance, as third-party insurance does not include any payout for damage suffered by your vehicle.

How is it calculated?
IDV is calculated by subtracting the vehicle’s depreciation from the manufacturer’s selling price.
IDV = Manufacturer’s listed price – depreciation value
So, if you had bought a car 1.5 years ago for Rs.12 lakh, the IDV would be:

If, however, you want to include the cost of accessories that you bought after the car’s purchase, IDV calculation will take into account the cost of accessories minus their depreciated cost.
IDV = (Manufacturer’s listed price – depreciation value) + (Cost of accessories – depreciation value of accessories)
So, if you bought a car 1.5 years ago for Rs.12 lakh and got accessories worth Rs.3 lakh for the car (considering 50% depreciation of accessories), the IDV would be:

The insurance regulator, Irdai, has set standard depreciation values for cars depending on their age, and these are used while calculating the IDV. These are as follows:

Is lower IDV better?
If you opt for a lower IDV, your premium will reduce, but in case of theft or total damage of car, you will not get the full value in insurance. So if you are a careful driver or your car is very old, you can opt for a lower IDV, but if you have a luxury car or it is new, do not cut down on IDV at the time of buying insurance or renewing it.