Car Insurance

How IDV Affects Your Car Insurance Premium (With Real Numbers)

By  Updated  3 min read
How IDV Affects Your Car Insurance Premium (With Real Numbers)
In this guide

Key takeaways

  • Own-damage premium ≈ IDV × a rate that depends on engine size, age and city zone, minus discounts.
  • Third-party premium, PA cover and GST don’t depend on IDV.
  • In our example, a 10% change in IDV moves the total premium by about 6%.
  • NCB and engine size usually move the premium far more than IDV does.

If you have ever moved the IDV slider on an insurer’s website, you have seen the premium change. But by how much — and is IDV the lever that matters most? Let’s break the premium down and put numbers on each factor.

The structure of a car insurance premium

Total = [ (IDV × OD rate × (1 − insurer discount) − voluntary deductible discount) × (1 − NCB) + add-ons + third-party + PA cover ] × 1.18

The OD rate is a percentage that rises slightly with engine capacity and vehicle age and is a little higher in the eight Zone A metros. The old India Motor Tariff rates (about 3.0%–3.7% of IDV for cars) are still a useful reference, but insurers now price own-damage cover themselves and online quotes are usually well below those rates. The third-party premium is fixed by the Government by engine capacity.

Our example car

A 1001–1500cc petrol car under five years old, registered outside Zone A, with an IDV of ₹5,60,000, an insurer charging 50% of the tariff OD rate, owner-driver PA cover at ₹330, no add-ons. All figures include 18% GST and come from our premium estimator.

Effect of IDV

IDV Total premium (25% NCB) Change
₹5,04,000 (−10%) ₹11,537 −₹791
₹5,60,000 ₹12,328 —
₹6,16,000 (+10%) ₹13,118 +₹790

A 10% change in IDV changes the total by about 6.4%, because only the own-damage part scales with IDV.

Effect of other factors (same IDV)

Change Total premium vs base ₹12,328
NCB 0% instead of 25% ₹14,963 +₹2,635
NCB 50% instead of 25% ₹9,692 −₹2,636
Registered in a Zone A metro ₹12,556 +₹228
Engine above 1500cc ₹17,992 +₹5,664
₹7,500 voluntary deductible ₹10,558 −₹1,770

Two things stand out. NCB is worth far more than a small IDV cut — protecting it matters. And the jump above 1500cc is mostly the third-party premium (₹7,897 instead of ₹3,416), which no insurer can discount.

Add-ons that scale with IDV

Many add-ons, such as zero depreciation, Return-to-Invoice and engine protection, are priced as a percentage of IDV or of the own-damage premium. When they are on the policy, IDV has a larger effect on the total. Our estimator shows indicative add-on prices; your quote is the real figure.

What this means when you renew

  • Don’t cut IDV to save money; the saving is small and the cover reduction is large. See high vs low IDV.
  • Check the NCB on every quote. A wrong NCB costs more than any IDV choice.
  • Consider a voluntary deductible only if you’d rarely claim — use the deductible calculator.
  • Compare quotes at the same IDV and add-ons, or use premium per lakh of IDV.

Plug in your own quote and see what each factor does.

Premium Estimator

FAQs

Why did my premium rise even though IDV fell?

Common reasons are a claim that reset your NCB, new add-ons, the insurer changing its own-damage pricing, or a revision in third-party rates.

Is GST charged on the third-party premium too?

Yes. GST at 18% applies to the whole motor premium, including third-party and PA cover.

Does a higher IDV earn a bigger NCB discount?

In rupees, slightly — NCB is a percentage of a larger own-damage premium. But you also pay that larger premium, so it is not a reason to raise IDV.

Sources

  • Figures computed with the idvcalculator.com premium estimator: India Motor Tariff reference OD rates, 50% insurer discount, Government-notified third-party base premiums (2022 rules), ₹330 PA cover, 18% GST.
  • Voluntary deductible discount slabs from the India Motor Tariff reference used in insurer prospectuses.

How we write and fact-check

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