IDV in car insurance: how it is calculated and how high to set it at renewal

The Insured Declared Value (IDV) is the maximum your insurer pays if your car or bike is stolen or declared a total loss, and it is the base on which the own-damage premium is calculated. For a vehicle up to five years old, IDV is the manufacturer's current listed selling price for your model and variant, minus a fixed depreciation percentage by age (5% up to six months, rising to 50% at four to five years), plus the depreciated value of accessories fitted separately. For older vehicles it is agreed between you and the insurer. Choosing an IDV lower than this to cut the premium saves little and can cost lakhs if the car is stolen.

This guide is part of how a car insurance premium is calculated. Use the IDV calculator for your own numbers.

The standard depreciation slabs

Policy wordings in India still use the schedule from the former India Motor Tariff:

Age of vehicle	Depreciation for IDV
Up to 6 months	5%
6 months to 1 year	15%
1 to 2 years	20%
2 to 3 years	30%
3 to 4 years	40%
4 to 5 years	50%
Over 5 years, or model discontinued	Agreed value, usually based on market value

Age is counted from the date of first registration or purchase, as shown on the policy. Notice the jump in the first year: a new car is insured at 5% depreciation, but at its first annual OD renewal it is about a year old, so the slab moves to 15% or 20% depending on the exact age the insurer uses. That is why the first renewal often shows the biggest fall in IDV.

Formula and worked examples

IDV = current listed ex-showroom price of the variant × (1 − depreciation %) + accessories at depreciated value.

Registration charges, road tax and insurance are excluded. The listed price is the price today for the same variant, not what you paid.

Example 1 (illustrative). A petrol sedan whose variant now lists at ₹11,50,000 is 3 years 2 months old (40% slab):

Depreciation: ₹11,50,000 × 40% = ₹4,60,000
IDV: ₹6,90,000

Example 2 (illustrative, CNG kit). A hatchback listing at ₹6,40,000, aged 1 year 8 months (20%), with a CNG kit fitted after purchase for ₹55,000:

Car: ₹6,40,000 × 80% = ₹5,12,000
Kit: ₹55,000 × 80% = ₹44,000 (insurers apply the same age-based depreciation to the kit, using the kit's own age)
IDV total: ₹5,56,000, and the kit must be endorsed on the RC and the policy

Example 3 (seven-year-old car). No slab applies. The insurer will suggest a value based on the used-car market for that model, condition and city. If you think it is too low, show listings or a valuation for comparable cars and ask for a higher agreed IDV.

How IDV moves your premium

The OD premium is roughly proportional to IDV. If an insurer's OD rate for your car is an illustrative 2.0% of IDV and your NCB is 25%:

IDV choice	Basic OD (2.0%)	After 25% NCB	Payout on theft
₹6,90,000 (standard)	₹13,800	₹10,350	₹6,90,000
₹6,21,000 (10% lower)	₹12,420	₹9,315	₹6,21,000
₹7,24,500 (5% higher)	₹14,490	₹10,868	₹7,24,500

Lowering IDV by 10% saves ₹1,035 a year before GST (about ₹1,221 with GST), but reduces the theft or total-loss payout by ₹69,000. You would need to go roughly 56 years without a total loss for the premium savings to equal that gap (₹69,000 ÷ ₹1,221). Raising IDV within the allowed band costs about ₹518 more a year and adds ₹34,500 to the payout.

When IDV actually matters

IDV is not the limit for ordinary repair claims; repairs are paid on the actual cost, less depreciation and deductibles. IDV becomes the payout in three situations:

Theft, after the police issue a final report that the vehicle is untraced.
Total loss, when repair cost exceeds 75% of IDV (the usual "constructive total loss" rule in policy wordings).
Total loss after flood or fire, again on the 75% test.

On a total loss, the insurer pays IDV minus the deductible, and either takes the salvage or deducts its value if you keep the wreck. Return to invoice cover can pay the gap between IDV and the invoice price; see add-ons.

How to choose IDV at renewal

Start from the standard figure using the IDV calculator.
When comparing quotes, set the same IDV on each, or the cheaper quote may simply be insuring a cheaper car. The worked renewal comparison shows how.
If your car is financed, the lender may require IDV at least at the standard figure; check the hypothecation terms.
For older cars, compare the suggested IDV with what the car would sell for. Insuring above market value does not mean you will be paid more than the loss.
Declare factory-fitted versus aftermarket accessories correctly. Factory-fitted items are already in the listed price.

Mistakes to avoid

Accepting the lowest IDV an online journey offers by default.
Comparing a quote with IDV ₹5,00,000 against one with ₹5,60,000 and calling the first cheaper.
Forgetting the CNG kit or an expensive music system, which leaves it uninsured or causes a claim dispute.
Using the on-road price instead of the ex-showroom price.

NCB slabs and the 90-day rule

Frequently asked questions

Can I choose any IDV I want?

No. Insurers allow a band around the standard IDV, often a few percent either side. For cars over five years old, IDV is agreed and may need inspection.

Does IDV fall every year?

Usually, because the depreciation slab rises. It can rise if the listed price of the variant rises enough, or fall faster if the price was cut, as happened for many models after the September 2025 GST changes.

Is IDV used for third-party claims?

No. Third-party liability is separate and does not depend on your car's value.

What if my model is discontinued?

The slab method cannot work without a current price, so IDV is agreed with the insurer, typically using market value.

Sources

IRDAI — motor policy wordings and consumer guidance
Parivahan Sewa — registration date and vehicle details used for age
Bima Bharosa — complaints about IDV disputes on total loss