IDV (Insured Declared Value)

IDV, or Insured Declared Value, is the insurer's estimate of the current market value of your vehicle at the start of the policy year. It is the maximum amount the insurer will pay in case of a total loss (such as theft, or an accident so severe that the vehicle is declared a constructive total loss). IDV is calculated under an IRDAI-notified formula as the manufacturer's listed selling price at the date of registration minus depreciation based on the vehicle's age: 5% in the first six months, 15% after six months to one year, 20% at two years, 30% at three years, 40% at four years, and 50% at five years.

After five years the IDV is mutually agreed between the insurer and the policyholder based on condition. Worked example: a car with an ex-showroom price of ₹8 lakh that is three years old would have an IDV of roughly ₹5. 6 lakh (after 30% depreciation).

If the car is stolen or written off, the maximum reimbursement is capped at ₹5. 6 lakh, not the ₹8 lakh you originally paid and not the ₹6. 5 lakh at which the car might be listed on a second-hand site.

The IDV is independent of any prevailing market valuation on used-car portals; it follows the IRDAI-notified depreciation schedule. A common misconception is that a higher IDV at renewal means a better claim experience. For total-loss claims, a higher declared IDV can secure a higher payout (though still capped by actual market value), but it also means a higher own-damage premium because the own-damage base is computed on IDV.

For partial-damage claims (the bulk of motor claims), IDV has almost no bearing — what matters is the repair cost, the depreciation schedule on individual parts (which is a separate matter from the overall IDV), and whether you have zero-depreciation add-on. Another common misconception is that IDV is the 'market value' in the common sense — it is not; it is a contractual figure derived from the IRDAI schedule. If you sell the car privately, the sale price is almost always different from the IDV.

Related: total loss, no claim bonus, comprehensive insurance.