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# What is Insured Declared Value (IDV) and How to USE IDV Calculator?

Motor insurance is a compulsory requirement to ply your vehicle on Indian roads. When it comes to buying motor insurance plans, brochures and the policy-related document is often loaded with many insurance jargons which can make it confusing for you to understand. Insured Declared Value or IDV is one such jargon which needs to be understood properly to make the right and informed buying decision. So, what is insured declared value or IDV? Let’s understand as to what insured declared value or IDV means, how it is calculated and how IDV is going to impact your vehicle insurance policy.

## What is IDV Full Form?

IDV stands for Insured Declared Value and represents the current market value of your vehicle.

## What is Insured Declared Value (IDV) in Insurance?

Insured Declared Value or IDV means the current market value of your vehicle. IDV represents the maximum sum insured fixed by the insurance company that will be payable during the total loss of vehicle during an accident or on the theft of the vehicle. IDV is calculated after factoring in the depreciation.

## Calculation of Insured Declared Value (IDV)

Insured Declared Value (IDV) = Manufacturer’s listed selling price (excluding insurance and registration cost) – a depreciation of the vehicle

Depreciation is deducted as per the schedule. Due to the depreciation factor, insured declared value (IDV) of the vehicle decreases as the vehicle ages. The insured declared value or IDV of the new car will differ from the car that is of four years old.

## The Depreciation Schedule to fix the Insured Declared Value (IDV) of the vehicle:

 Age of the vehicle % of Depreciation for adjusting Insured Declared Value (IDV) of the car New car – between o to six months 5% Between six months to one year 15% Between one year to two years 20% Between two years to three years 30% Between three years to four years 40% Between four years to five years 50% 6th year onwards IDV is mutually agreed between insured and insurance company

For accessories that are not factory fitted, insured declared value or IDV is calculated separately at an extra cost if you are seeking insurance for those accessories. For cars older than five years of age, insured declared value or IDV is fixed based on an assessment of the car’s condition by the surveyor and not by the depreciation.

## Importance of Insured declared value or IDV

Insured Declared Value or IDV is important because it is an important consideration in the process of determining insurance premium. It’s important to declare the correct insured declared value or IDV while purchasing a car insurance policy. Declaring higher than or lower than market IDV will have an impact on your premium and claim amount. Following are the impact on IDV:

• Declaring higher insured declared value (IDV): If you choose higher IDV, you may end up paying higher amount of premium even though the claim amount that you may receive is higher.
• Declaring lower insured declared value (IDV): If you choose lower IDV, you may pay a lower premium but you will end up receiving a lower claim amount compared to your actual loss.

Hence, it’s important to declare IDV (insured declared value) close to the market value of your car so that in the situation of theft or constructive total loss to the vehicle can be compensated fairly.

## How to calculate the insured declared value or IDV?

IDV in insurance means the current market value of the vehicle. IDV is calculated based on selling value of your car after factoring in the depreciation applicable on the vehicle parts (depending on the age of the vehicle).

Insured declared value or IDV = Manufacturer’s listed selling pricedepreciation value based on the age of the vehicle

In case, your new car is equipped with additional accessories after the purchase, IDV is calculated as follows:

Insured declared value or IDV = (Manufacturer’s listed selling pricedepreciation value based on the age of the vehicle) + (cost of extra accessoriesdepreciation value of these parts)

IDV can be calculated online also using insured declared value or IDV calculator.

## Points to remember while calculating IDV

Following are the important points to be considered while assessing insured declared value (IDV) of your car:

• Do your homework. Check with the manufacturer before you give a nod to IDV fixed by your car insurance provider.
• IDV is the most important component while calculating the renewal premium for car insurance. Hence ensure the cost of the premium is determined based on your car’s IDV.
• Greater the IDV higher is the premium. Lesser the IDV lesser will be your compensation amount. Hence, declare the right amount of IDV to get the rightful claims.

To sum up, it’s important to know that your car insurance policy runs around IDV. Hence, to choose the best and right insurance for your car, ensure to check IDV before purchase, declare the right IDV.

1. What is ‘depreciation’ in car insurance?

The loss of value of your car with time is known as depreciation. Wear and tear of the vehicle with its age is common which reduces the value of car parts and the car.

2. How can you protect your car’s sum insured from the rate of depreciation?

Vehicle’s value diminishes every year with the general wear and tear of its part. Depreciation rates are applicable as per the policy schedule while calculating the sum insured in a policy. However, there is add on called ‘zero depreciation’ available with every car insurance provider to protect your sum insured from the rate of depreciation. However, this add-on benefit is not applicable in case of a total loss to the vehicle.

3. What is the information based on which IDV is calculated by the car insurance provider?

Car insurance provider calculates the insured declared value or IDV based on various information provided by you as an insured. The information that is considered in the calculation of IDV is vehicle make and model, registration details, cubic capacity and vehicle variant etc.

4. What is IDV calculator?

IDV value calculation is pretty simple with IDV calculator. It is an online tool to calculate or assess insured declared value of your car. All you need to do is provide few basic information related to your vehicle online and IDV calculator instantly calculates the IDV for you. You may need to provide details of make and model of your car, registration date, city of registration, fuel type, age of your car, policy type and policy period.

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