What Is IDV in Insurance? Meaning, Formula and Examples
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In this guide
Key takeaways
- IDV (Insured Declared Value) is the sum insured on the own-damage part of your motor policy.
- It is paid on theft, total loss or constructive total loss — not on ordinary repairs.
- IDV = ex-showroom price − age-based depreciation (5% to 50% over five years) + depreciated value of extra accessories.
- A lower IDV saves a little premium but can cost you lakhs on the worst day of ownership.
Every motor insurance quote in India shows a number labelled IDV. Most people glance past it and look at the premium. That is a mistake, because IDV decides how much you receive if your car or bike is stolen or damaged beyond repair. This guide explains what IDV means, how it is calculated and how to check that the figure on your quote is fair.
IDV meaning in simple words
IDV stands for Insured Declared Value. Policy wordings define it as the sum insured for the vehicle: it is fixed at the start of each policy year and is the maximum the insurer will pay under the own-damage section for a total loss or theft. Think of it as the insurer’s agreed value of your vehicle for that year.
Two details are worth knowing. First, IDV does not fall month by month during the policy year — once fixed, it is treated as the vehicle’s market value for the whole year for total-loss and theft claims. Second, it is reset at every renewal, usually lower than before, because the vehicle is a year older.
When is IDV actually paid?
- Theft — if the vehicle is stolen and not traced, the claim is settled on the basis of the IDV.
- Total loss — the vehicle is destroyed beyond repair, for example in a serious accident or fire.
- Constructive total loss (CTL) — the vehicle can technically be repaired, but the cost of retrieval and repair exceeds 75% of the IDV, so the insurer settles it as a total loss.
For ordinary accident repairs, the insurer pays the repair bill minus depreciation on parts and deductibles. IDV still acts as the upper limit, but it is the total-loss and theft situations where it matters directly.
How IDV is calculated
The ex-showroom price is the manufacturer’s listed selling price of your model and variant, including taxes on the vehicle but excluding registration charges, road tax and insurance. Depreciation follows a fixed schedule that appears in standard Indian policy wordings:
| Age of vehicle | Depreciation for IDV | IDV as % of ex-showroom |
|---|---|---|
| Not exceeding 6 months | 5% | 95% |
| Exceeding 6 months but not exceeding 1 year | 15% | 85% |
| Exceeding 1 year but not exceeding 2 years | 20% | 80% |
| Exceeding 2 years but not exceeding 3 years | 30% | 70% |
| Exceeding 3 years but not exceeding 4 years | 40% | 60% |
| Exceeding 4 years but not exceeding 5 years | 50% | 50% |
| Above 5 years | Mutually agreed | Based on market value |
The same schedule applies to cars, motorcycles and scooters. Electrical and non-electrical accessories fitted after purchase, and an externally fitted CNG or LPG kit, are added at their invoice value less the same depreciation.
Check the schedule-based IDV for your vehicle in 10 seconds.
IDV examples
A two-year-old car
A hatchback with an ex-showroom price of ₹7,20,000 is 2 years and 3 months old when the policy starts. It falls in the “exceeding 2 years but not exceeding 3 years” slab, so depreciation is 30%. IDV = ₹7,20,000 − ₹2,16,000 = ₹5,04,000.
A nine-month-old scooter
A scooter with an ex-showroom price of ₹92,000 is nine months old. Depreciation is 15%, so IDV = ₹92,000 − ₹13,800 = ₹78,200.
A car with accessories
Add a ₹25,000 music system and ₹15,000 of alloy wheels fitted after purchase to the first example. At 30% depreciation they add ₹28,000, taking the IDV to ₹5,32,000.
What IDV includes and excludes
| Included in IDV | Not included in IDV |
|---|---|
| Ex-showroom price of the model and variant | Registration charges and road tax |
| Accessories fitted after purchase (if declared) | The insurance premium |
| Externally fitted CNG/LPG kit (if declared and endorsed on the RC) | Extended warranty, FASTag, dealer handling charges |
| Factory-fitted features of your variant (already in the price) | Personal belongings kept in the vehicle |
Because registration and road tax are excluded and depreciation starts at 5%, even a brand-new car’s IDV is noticeably lower than what you paid. If that gap matters to you, see our guide to Return-to-Invoice cover.
Why IDV matters at renewal
Your own-damage premium is calculated as a percentage of the IDV, so a lower IDV means a slightly lower premium. Some quotes use this to look cheaper. But the saving applies only to the own-damage part of the premium, while the reduction in cover is felt in full if the vehicle is stolen or written off. A lower IDV also lowers the 75% threshold for constructive total loss, so a smaller repair bill can tip the vehicle into a total-loss settlement.
The practical rule: choose an IDV close to the schedule value (or, for older vehicles, close to the real resale value). Use our IDV vs premium tool to see what each extra lakh of cover actually costs.
Frequently asked questions
Is IDV the same as the sum insured?
Yes. In motor insurance, the IDV is the sum insured for the vehicle under the own-damage section.
Does IDV apply to third-party insurance?
No. A third-party-only policy covers your legal liability to others and has no IDV. IDV applies to comprehensive and standalone own-damage policies.
Can I choose my own IDV?
Within limits. Insurers calculate a system IDV and usually allow you to move it up or down within a band. For vehicles older than five years, IDV is agreed between you and the insurer.
Will I always get the full IDV on a theft claim?
The claim is settled on the basis of the IDV, subject to the policy terms, any applicable deductible and the required documents, such as the police report that the vehicle could not be traced.
Sources
- Standard private car and two-wheeler policy wordings filed by Indian general insurers — definition of IDV, age-wise depreciation schedule and total loss provisions.
- Insurance Regulatory and Development Authority of India, irdai.gov.in.
Keep reading
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