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What is IDV?

The term IDV (full form- Insured Declared Value) is the current market value of your vehicle. Simply put, IDV in insurance refers to the maximum amount your insurance provider will pay you in case of total damage or theft of your vehicle. IDV is calculated by taking into account the manufacturer’s selling price for the vehicle minus the depreciation.


In the unfortunate event of theft or damage to your vehicle, the Insured Declared Value (IDV) is used to decide the maximum amount you can file an insurance claim for. To put it simply, the IDV is the maximum sum assured that you can get as a vehicle insurance policyholder. Hence, you must declare the exact Insured Declared Value amount to ensure the claim settlement goes smoothly. Once the claim is verified and settled, the insurance company ensures that the insured is compensated for the current market value of their vehicle. Note that this is not the same as the resale value of the car.

How is IDV Calculated?

The insurance company determines your vehicle’s Insured Declared Value by checking the selling price listed by the vehicle manufacturer, and the brand, model and age of the vehicle. Then, the selling price is adjusted to account for the depreciation of the vehicle due to wear and tear to get the true IDV of the insured vehicle. 


You can also get some of your vehicle’s accessories insured as well, but if these are additions made by you and not the original manufacturer, a separate Insured Declared Value will be calculated for them. Remember that the insurance and registration costs of the vehicle are not included in the IDV calculation.


The insurer and the insured are required to come to a mutual agreement regarding the insured vehicle’s Insured Declared Value. Tools like Bajaj Markets online IDV calculator have made it very easy for policyholders to know the real IDV of their vehicles, thus making claim settlement stress-free and quick.

Depreciation Schedule for Fixing IDV

To get a good estimate of how the Insured Declared Value is determined, you can refer to this depreciation schedule used to calculate the Insured Declared Value of your vehicle:

Age of the Vehicle

Rate of Depreciation (for IDV)

Up to 6 months


6 - 12 months


1 - 2 years


2 - 3 years


3 - 4 years


5 years


Factors That Help Determine the IDV

  • Age of the vehicle:

The age of your vehicle is a significant factor; the older your vehicle the lower the Insured Declared Value as the depreciation rate will be higher.

  • Make and model of the vehicle:

The brand and model of your car play a role in determining the repair expenses in case it gets damaged. So vehicles made by BMW will have higher IDV than vehicles made by Hyundai.

  • Depreciation rate:

The market value of your car begins depreciating the minute you buy it. The aforementioned depreciation rate schedule is used to calculate your Insured Declared Value.

  • Geographical area:

The state or city where your vehicle is registered is another factor. The IDV for vehicles registered in urban regions will be different from the Insured Declared Value for those in more remote areas.

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Impact of IDV on Your Car Insurance Policy

The Insured Declared Value of your vehicle is a crucial determinant of how much your insurance policy will cost you and what your coverage will look like. The higher the car Insured Declared Value, the greater the insurance premium and the same is true for lower IDV and lower premium. Now, it might seem like setting your Insured Declared Value low will be beneficial for you, but you should avoid falling into this trap. Whilst a lower IDV may result in lower premiums, it will also mean that should something happen to your vehicle, the insurance coverage will be less than what the vehicle’s market value is, which is a negative for you.


Declaring the exact Insured Declared Value is essential to get an accurate estimate of your own-damage cover premium. You can consider other factors to get a clear sense of this.

What is IDV in Insurance

Difference between IDV and Premium



Insured Declared Value is the amount the insurance company is willing to pay as compensation during unfortunate incidents. 

Premium is the amount paid by an individual to purchase an insurance policy.

IDV denotes the current market value of the vehicle.

Premium denotes the insurance contract.

IDV is calculated taking various factors into consideration like depreciation, age of the vehicle, etc.

The premium is calculated by taking IDV, add-ons, etc into consideration.

Policyholders need to declare IDV  in comprehensive insurance plans. Third-party liability insurance plans do not require IDV.

Policyholders have to mandatorily make premium payments for all types of insurance policy plans.

IDV is calculated or updated annually, mainly during the policy renewal.

Premium payments can be on a monthly or annual basis as per the convenience or the comfort of the policyholder.

IDV for Older Vehicles

As the insured vehicle gets older, the premium of the damage cover goes on decreasing according to depreciation.


For vehicles that are aged 5 years or more, the Insured Declared Value depends on:


  • The brand/manufacturer

  • Vehicle model

  • Availability of spare parts


The older a vehicle is, the more important it is that the insurer and insurance seeker discuss and come to a mutual agreement on the IDV.

Why does your IDV Keep Falling?

The market value of your vehicle starts falling, the moment you purchase it. A low IDV results in a lower premium payment which is preferred by a lot of people, however, it also means the claim amount will also be lower. 


In pursuit of getting a high claim amount from the insurance companies, people inflate the IDV of their vehicles and pay higher premium amounts as well. But during claim settlement, they consider other factors and compensate as per the market value of the vehicle. 

Factors/Reasons that lead to falling in the value of IDV are -


  • Vehicle Manufacturing Year

  • Model of Vehicle

  • Age of the Model

  • Vehicle’s Ex-Showroom Price 

  • Vehicle Registration Details including city, registration year, etc.

  • Vehicle Usage (Private, commercial, etc.)

  • Cubic Capacity

Advantages and Drawbacks of Higher & Lower IDV

Type of IDV




Lower premium

Lower compensation for total damage, theft or loss of vehicle

High IDV

Higher compensation for total damage, loss or theft of vehicle

Higher premium

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IDV in insurance is calculated by taking into account the car/bike manufacturer’s listed selling price minus the depreciation value of the vehicle. The vehicle registration and insurance costs are not included in the IDV.

IDV stands for Insured Declared Value which denotes the market value of the vehicle whereas NCB stands for No-Claim Bonus which are reward points earned by the policyholder if they do not make a claim. These NCB points can be redeemed in the form of premium discounts.


Insurance companies offer add-on features like new vehicle replacement or return to invoice, that will help the policyholders cover the gap between the on-road price of the new vehicle and the IDV of the current vehicle.

IDV means the Insured's Declared Value. It is the value of the vehicle, which is arrived at by adjusting the current manufacturer's listed selling price of the vehicle with a depreciation percentage as prescribed in the Tariff. For the vehicles that are obsolete and aged over 5 years, the IDV will be the value agreed between the Insurer and the Insured.

Manufacturer's Listed Selling Price = Cost Price + Local Duties/Taxes, excluding Registration and Insurance.

The IDV of the vehicle is to be fixed based on the manufacturer's listed selling price of the brand and model, as the vehicle proposed for insurance at the commencement of insurance /renewal and adjusted for depreciation.

At the time of policy purchase and each renewal, the premium is calculated based on the depreciated value of the vehicle. However, as a holder of the car insurance policy, one has the liberty to fix the IDV. The car owner can alter the IDV while renewing car insurance.

IDV is the depreciation excluded purchased price of a car. With ageing, the depreciation rate of a vehicle increases. As a result, the IDV becomes lower in the next policy period.

The higher the IDV, the higher will be the insurance premium. IDV is equivalent to the current worth of your insured car and is a significant parameter in determining insurance costs.

You can choose the maximum or the lowest IDV. The IDV directly affects your premium and is best to choose the right IDV based on the market value to protect your car and finances. 


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