Insured Declared Value (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.

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.

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:

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.

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.

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