Depreciation Rates for Cars With Insurance Coverage

Is There A Standard Depreciation Rate for Cars With Insurance Coverage?

27 Dec 2019

Top carmakers - Hyundai, Honda, Tata - have seen a marked increase in their sales coming from first-time buyers. Some models - including Suzuki Dzire and Hyundai Xcent -are getting more than half their sales from first-time buyers.

The number of cars sold in India increases every year. There are ups and downs - for example, car sales showed a minor dip in 2014 - 2.5 million cars were sold, a decrease from the 2.7 million sold in 2013. In 2019, the auto industry is experiencing a slow-down again. But as the graph below shows, the overall graph is always climbing north.

Everyone who buys a car and drives it on Indian roads is legally required to buy car insurance. If you’re looking for a comprehensive car insurance policy, available on Finserv MARKETS, is the way to go. When you avail this insurance scheme, you will gain a lot of benefits. Car Insurance offers cashless services across 4000+ garages across India. So, if your car breaks down in an unfamiliar city or town, you can find our nearest partner garage and get your car back in order.

While buying car insurance, however, multiple industry terms crop up that can confuse a first-time car buyer. What is IDV? What are car depreciation rates? And will different insurance firms have different depreciation rates?

IDV - it stands for Insured Declared Value - is the amount you get when you claim your car insurance. IDV depends on two numbers. The first is the current market price of the car - the IDV doesn’t take into account the price you paid to get the car, but the current price listed by the manufacturer. The second is your car’s depreciation rate - which is tied to your car’s age.

Over time, a car’s performance drops and its aesthetic value goes down. This is reflected in the car’s valuation. The older your car, the greater the depreciation rate. The higher depreciation rate captures the natural wear and tear that every car undergoes.


A depreciation rate of 5% means the car is 5% less valuable than its value when it was first bought. A rate of 50% means the car’s value has dropped in half.

See the following table to find out how much your car will depreciate in value over the years.


Age of the car

Percentage depreciation for IDV calculator

Less than 6 months


More than 6 months but not above 1 year


More than 1 year but not above 2 years


More than 2 years but not above 3 years


More than 3 years but not above 4 years


More than 4 years but not above 5 years



Are car depreciation rates standardized? The answer is both yes and no. Yes, they are standardized across the industry - at any given moment in time, uniform rates apply, regardless of the insurance provider you’re dealing with. However, depreciation rates vary across time. For instance, Nirmala Sitharaman, India’s finance minister, increased the depreciation rates this year to help boost the lacklustre auto sales. The additional depreciation rates will kill a car’s value faster over time, thereby encouraging buyers to ditch their old cars for new ones sooner. If they wait too long to resell, then they will be forced to sell it for too little

Another consequence of a higher depreciation rate is that insurance premiums have gone down. If you have been considering buying an insurance policy, now is the perfect time to do it. Car Insurance plans on Finserv MARKETS are customizable. At higher premiums, you can get a zero-depreciation plan where your claims won’t factor in your cars’ depreciation rate. Your car’s IDV will depend only on the car’s current market price, and won’t take your car’s age into account.

What’s more, with Car Insurance available on Finserv MARKETS, you can utilise an EMI Card to pay your premiums in handy EMIs. You can also avail instant claim settlements of Rs 20,000 through the Motor OTS Wallet. Judicious policyholders - people who refrain from filing claims in the last year of their insurance - are eligible for a no claim bonus while renewing their policy.

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.