In this article
- What is IDV
- How IDV is calculated
- IDV and your premium
- Can you customise your IDV
- Getting your IDV right at renewal
What is IDV
Insured Declared Value, or IDV, is the current market value of your vehicle as agreed between you and the insurer at the time of policy issuance. It represents the maximum amount you'll receive if your car is stolen or declared a total loss due to an accident.
How IDV is calculated
IDV is calculated by taking your car's original showroom price (ex-showroom) and applying a standard depreciation rate based on the vehicle's age — for example, 5% depreciation for a vehicle less than six months old, rising in slabs up to 50% for vehicles aged four to five years.
Registration and insurance costs are excluded from the calculation; only the ex-showroom price of the vehicle and its accessories are considered.
IDV and your premium
Your premium moves in the same direction as your IDV — a higher IDV means a higher premium, because the insurer is on the hook for a larger potential payout. Lowering your IDV reduces your premium, but also reduces what you'd receive in a total loss or theft claim.
Some owners deliberately set a low IDV to save on premium, not realising it can leave them significantly underinsured relative to their car's actual replacement cost.
Can you customise your IDV
Most insurers allow you to adjust your IDV within a permissible range (often ±10–15% of the insurer-calculated value) at the time of purchase or renewal. It's rarely worth setting it artificially low purely to save a modest premium amount.
Getting your IDV right at renewal
At every renewal, review the IDV the insurer has proposed rather than accepting it automatically. If you've added accessories, verify they're reflected. If your car's actual market value (based on resale listings) differs meaningfully from the insurer's calculation, you can usually negotiate an adjustment within the permitted band before finalising your policy.
