What is IDV in Car Insurance 2025? Complete Guide with Comparison, Real Experiences & Buying Tips
What is IDV in car Insurance 2025 Car insurance in India has many technical terms that often confuse vehicle owners, and one of the most important among them is IDV – Insured Declared Value. If you are renewing your car insurance in 2025 or buying a new one, understanding IDV is essential because it directly impacts your premium, claim amount, and financial protection.
In this guide, we’ll break down everything you need to know about IDV, use real customer-like examples, compare it with other aspects of insurance, and provide a buying guide to help you make the right choice.
What is IDV in Car Insurance?
IDV stands for Insured Declared Value. It is essentially the maximum sum insured or the amount your insurance company will pay you if your car suffers a total loss (TL), constructive total loss (CTL), or gets stolen.
- For a new car, IDV is usually taken at 95% of the ex-showroom price (excluding registration & road tax).
- As the car ages, the IDV decreases because of depreciation.
- IDV is fixed at the start of each policy and remains the same for that policy period.
Customer Experience Example:
Ramesh bought a new Maruti Baleno in 2024. At the time of insurance, the ex-showroom price was ₹8,00,000. His insurer fixed the IDV at ₹7,60,000 (95% of price). Six months later, his car met with a major accident. Since the repair cost exceeded 80% of the IDV, the car was declared a constructive total loss. Ramesh received ₹7,60,000 (minus compulsory deductible) as claim.
IDV Depreciation Schedule (As per IRDAI Motor Tariff)
| Age of Vehicle | % Depreciation | Example on Car Worth ₹10,00,000 |
|---|---|---|
| Not exceeding 6 months | 5% | ₹9,50,000 |
| 6 months – 1 year | 15% | ₹8,50,000 |
| 1 – 2 years | 20% | ₹8,00,000 |
| 2 – 3 years | 30% | ₹7,00,000 |
| 3 – 4 years | 40% | ₹6,00,000 |
| 4 – 5 years | 50% | ₹5,00,000 |
| Above 5 years | Mutually decided between insurer & insured | Negotiable |
Customer Story: Priya renewed her Hyundai i20’s insurance after 3 years. Initially worth ₹10 lakh, her insurer fixed the IDV at ₹6 lakh (after 40% depreciation). She compared quotes from 3 companies and noticed one insurer offered ₹6.2 lakh IDV with slightly higher premium. She wisely chose the higher IDV, ensuring better compensation in case of theft.
Why is IDV Important in 2025?
- Determines Your Claim Amount – In case of theft or total loss, IDV is the maximum compensation you will receive.
- Affects Premiums – Higher IDV means higher premium, lower IDV means cheaper premium but lesser claim benefit.
- Depreciation Protection – Helps you understand how much your car’s value decreases each year.
- Financial Safety Net – Prevents out-of-pocket expenses when accidents lead to severe losses.
Friend’s Conversation Example:
Arun: “Bro, my premium is so high. Can I declare a lower IDV?”
Karthik: “You can, but think. If your car is stolen, you’ll only get that lower amount. Saving ₹1,000 now could cost you lakhs later.”
IDV vs Zero Depreciation Cover
| Feature | IDV | Zero Depreciation Cover |
|---|---|---|
| Meaning | Market value of car, maximum claim payout | Add-on cover that removes depreciation deduction during claim |
| Applicability | Total loss, theft, CTL claims | Partial loss/repairs |
| Age Limit | All cars, with depreciation applied | Available only for cars less than 5 years |
| Impact on Premium | Higher IDV = higher premium | Adds ~15-20% to premium |
Example: Manoj had a 3-year-old Honda City. With IDV fixed at ₹7 lakh, he also took a zero-dep add-on. When he met with a bumper accident, instead of getting a reduced claim due to part depreciation, his insurer paid the full repair bill.
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IDV in Third-Party vs Comprehensive Insurance
- Third-Party Insurance – IDV is not applicable because it only covers damages caused to other people or property.
- Comprehensive Insurance – IDV plays a critical role as it decides your own damage coverage and claim settlement.
Customer Case:
Rahul had only third-party insurance for his old Swift. When it got stolen, he received no compensation. If he had comprehensive insurance with correct IDV, he would have got around ₹2.5 lakh.
How is IDV Calculated?
Formula:
IDV = Ex-showroom price – Depreciation + Accessories Value (if declared)
Steps to Calculate IDV:
- Find manufacturer’s listed price for your car model.
- Apply IRDAI depreciation % based on age.
- Add cost of extra accessories (music system, alloy wheels).
- Final value is the IDV.
Example:
Car: Kia Sonet, ex-showroom ₹12 lakh, 2 years old.
Depreciation: 30% = ₹3.6 lakh.
IDV = ₹12 – ₹3.6 = ₹8.4 lakh.
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How to Choose the Right IDV?
- Avoid Too Low IDV: Cheaper premiums but low compensation.
- Avoid Too High IDV: Higher premiums without practical benefit.
- Set Closest to Market Value: Balance between premium and protection.
- Use Online IDV Calculators: Compare different insurers’ values.
Customer Tip: Shreya, a Bangalore IT professional, always compares IDV across 3-4 insurers before renewing. She noticed a ₹20,000 difference in IDV between two companies for her 4-year-old Creta. That one decision gave her peace of mind during renewal.
Buying Guide for Car Insurance with Right IDV (2025)
- Check Ex-Showroom Price – Always use the latest manufacturer data.
- Consider Vehicle Age – The older the car, the lower the IDV.
- Look at Claim History – Frequent claims may lower offered IDV.
- Select Comprehensive Insurance – For IDV to matter, you need more than third-party cover.
- Evaluate Add-ons – Consider zero-dep, engine cover, roadside assistance if you own a new car.
- Compare Across Insurers – Each company may offer a slightly different IDV.
- Negotiate for Cars Older than 5 Years – Since IDV is mutually decided, discuss with insurer.
Comparison: Higher IDV vs Lower IDV
| Aspect | Higher IDV | Lower IDV |
|---|---|---|
| Premium | High | Low |
| Claim Payout | High | Low |
| Theft/Total Loss Protection | Better | Weak |
| Best For | New cars, urban usage | Old cars, limited usage |
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FAQs about IDV in Car Insurance 2025
Q1. Can I increase or decrease IDV on my own?
Yes, insurers allow a range (usually ±15%) around the standard IDV.
Q2. What happens if I declare too high IDV?
You pay a higher premium unnecessarily, but claim settlement is still capped at market value.
Q3. Does IDV affect third-party insurance?
No, IDV matters only in comprehensive policies.
Q4. My car is more than 5 years old. How is IDV decided?
Through mutual agreement between you and insurer, often after physical inspection.
Q5. Is IDV the resale value of my car?
Not exactly. It’s the insurance market value for claims, usually lower than resale value.
Q6. Should I always buy zero-depreciation cover with IDV?
Not mandatory, but highly recommended for cars under 5 years old.
Conclusion
In 2025, understanding IDV (Insured Declared Value) is no longer optional—it is the backbone of your comprehensive car insurance policy. It decides how much you will get in case of theft or total damage and directly affects your premium.
- Compare IDV across insurers
- Avoid setting it unrealistically low or high
- Consider add-ons like zero-dep for extra safety
By making the right IDV choice, you ensure that your financial risk is minimized, and your car stays protected against unexpected losses.
Remember: Insurance is not just about paying premiums—it’s about buying peace of mind.
