What Does IDV Mean In Car Insurance? How Does It Change?

A car insurance policy isn’t just a mandatory legal requirement, it is also a means to insure you and others around you against damages that may arise with you behind the wheel and such. The motive of insurance is to provide financial cover for emergencies and damages respectively. Automobiles have a shorter lifespan and that is where IDV comes into play.

What is IDV?

IDV is an abbreviation for Insured Declared Value, and it is not something that can be skipped when buying a car insurance policy. To put it simply, IDV is the sum assured value that is promised by your insurer at the time of claim. The claim amount offered is pretty much the same as your vehicle’s market value at that time. If the vehicle suffers any kind of damage in an accident, IDV is the amount that is paid as the sum assured.

IDV is a detrimental factor when calculating the premium payable on the Own Damage clause of the car insurance policy. The premium you pay is divided to cover various clauses on your car insurance policy, this including IDV at an approximate 2-3 percent, considering the age and seating capacity of your car.

Most insurance companies charge a higher premium in the event that you decide to increase your IDV allocation. Hence, it is very important to calculate the IDV of your car before you apply for insurance. Without OD (Own Damage) calculation, it would be nearly impossible to derive the OD premium.

Does IDV change over time?

The value of your car is inversely proportional to its age, i.e. the value of your car drops as your car ages. The IDV also changes accordingly. If you own a high-end car like BMW, Mercedes- Benz, Jeep or Audi, the IDV may stay the same for a couple of years. Eventually, as time passes, the percentage of depreciation piles over the IDV of your car. Here is how IDV decreases overtime; if your car is over 6 months old, the percentage of depreciation accounted for IDV is 5 percent. After 8-10 months, the IDV percentage increases by 15 percent. Once the car reaches 4 years, the IDV reaches up to 50 percent.

What if you declare an IDV other than the market value?

There are two types of car owners. The ones who get offended upon hearing the term ‘depreciation’ and the other type who remain ignorant of the term itself. When these ignorant car owners refuse to set IDV according to the market value derived for their beat-down cars, they face two kinds of scenarios:

  1. When declaring a low IDV: This scenario is faced more by the people who fall in the second category. People who overlook the need for adequate insurance develop less regard towards their car due to damage, and opt for a normal low insurance policy to stay on the right side of the law. Since they pay low premium for insurance, they are eligible for lesser coverage, thereby ending up paying for accident damages primarily from their own pocket.


  1. When declaring a higher IDV: Getting a higher IDV is nearly impossible, given the deteriorating condition of your car over time. The best you can do is repair the vehicle to the best condition possible and maintain the condition to the best of your ability over time, in order to get an IDV closest to the market valuation of your car.

There are many terms like these that play an important role in car insurance. Thus, before buying insurance for your car, it is important that you inspect such aspects of automobile insurance. You can also refer to PLIndia-Motor Insurance to get more details on car insurance or you may contact us on insurance@plindia.com.

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