Insured's Declared Value (IDV) in Motor Insurance
IDV is the vehicle's sum insured and the most you are paid on theft or total loss.
The Insured's Declared Value (IDV) is the sum insured for the vehicle under a motor own damage policy. It is roughly what the vehicle is worth today, and it is the most the insurer pays if the vehicle is stolen or written off. The premium for own damage cover is worked out on it.
IRDAI's 2024 master circular on general insurance says the IDV is deemed to be the sum insured and is fixed at the start of each policy period. That is why it falls every year at renewal as the vehicle ages.
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How IDV Is Fixed Today
- check_circleEach insurer's Product Management Committee approves the criteria for IDV and any depreciation scale used to reach it.
- check_circleThe insurer publishes the basis on its website and shows it in the Customer Information Sheet.
- check_circleThe customer must be given an illustration of how the IDV was calculated.
- check_circleAccessories fitted after purchase (and not part of the listed price) can be added to the IDV on declaration, and are then insured too.
The Tariff-Era Depreciation Grid
This is the scale the India Motor Tariff applied before detariffing, and the one the courseware teaches. IDV = manufacturer's listed selling price, less depreciation by age. An insurer may still use it in its filed product, but the rule that applies is the scale that insurer has approved and published.
| Age of vehicle | Depreciation for IDV |
|---|---|
| Not exceeding 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 an obsolete model | No grid: IDV agreed between insurer and insured |
Worked Example
A two-wheeler in Bengaluru had a listed selling price of ₹1,20,000 and is 2 years 4 months old at renewal. On the tariff-era grid it attracts 30% depreciation, so IDV = ₹1,20,000 × 70% = ₹84,000. If the bike is stolen during the year and not traced, the claim is settled on ₹84,000, less any deductible, whatever a second-hand dealer would have paid for it.
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Total Loss and Constructive Total Loss
- Total loss (TL)
- The vehicle is stolen and untraced, or destroyed. The claim is paid on the IDV, not on a higher market value.
- Constructive total loss (CTL)
- The vehicle can technically be repaired, but repair does not make economic sense. Each insurer's Product Management Committee now sets the TL/CTL criteria and publishes them. The tariff-era test, which the courseware teaches, treated a vehicle as CTL when the repair cost exceeded 75% of the IDV.
- Cash loss settlement
- For a wreck, IRDAI requires the insurer to let the policyholder keep it and be paid the IDV less the assessed salvage value, based on competitive quotes, including any the policyholder brings.
- After a total loss
- The insurer can cancel the own damage cover from the date of damage, and the third-party cover once the registration of the wreck is cancelled or the wreck has its own TP policy.
How IC-11 Tests This
Expect a grid question (depreciation for a vehicle of a given age), "what is paid on total loss when market value is higher than IDV" (the IDV), and renewal-notice wording that asks the insured to revise the value to current market value. The trap is assuming the insurer pays the market value, or applying the IDV grid to parts: the grid sets the sum insured, while parts depreciation in a repair claim follows a separate schedule.
FAQs
What is IDV in car insurance?expand_more
The Insured's Declared Value: the sum insured for your vehicle under own damage cover, fixed at the start of each policy year. It is the maximum paid if the vehicle is stolen or written off.
How is IDV calculated?expand_more
The manufacturer's listed selling price less depreciation for the vehicle's age, plus declared accessories. The tariff-era grid ran from 5% (up to 6 months) to 50% (4-5 years); today each insurer uses the scale its product committee has approved and published.
Is a higher IDV better?expand_more
A higher IDV means a larger payout on theft or total loss and a higher premium. It has to stay within the basis the insurer has published, because own damage cover is still an indemnity for the vehicle.
What is constructive total loss in motor insurance?expand_more
A loss where repair costs make repairing uneconomic, so the vehicle is settled as a total loss. The insurer's published criteria decide it; the tariff-era rule used 75% of IDV as the line.
Next steps
- Motor Claimsarrow_forward
- No Claim Bonusarrow_forward
- Motor Policy Typesarrow_forward
- Sum assured vs sum insured (IC-01)arrow_forward
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