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What Must You Know About IDV Before Buying Car Insurance?

Updated On Oct 13, 2023

IDV - The "MUST KNOW" Facts!

While many people understand the importance of having a comprehensive car insurance plan available at affordable premiums, not many realise how the choice of their vehicle’s IDV can have a direct bearing on the premiums that they have to pay during the policy period. The IDV of your car cannot exceed its market price and is not calculated randomly. The car insurance companies will mainly consider the following factors before arriving at the IDV of your car. These include:

  • Registration details of your car;
  • City where your car was registered;
  • Date of the first purchase of the vehicle;
  • Nature of registration;
  • Car manufacture details including make and model;
  • The cubic capacity of the car’s engine;
  • Current showroom price of the car.

There are many ways to arrive at the correct value of the IDV. However, in most cases, insurers apply the thumb rule to evaluate the IDV of your car before quoting it in your car insurance policy.

What Must You Know About IDV Before Buying Car Insurance?

IDV = (Car’s price listed by the manufacturer – Depreciation value calculated on the car) + (Price of the accessories not included in the list price of the car – Depreciation value calculated on the accessories)

Does it help to choose IDV different from the car’s market value?

Many people have a limited understanding of the IDV concept. This explains why they opt for an IDV amount that is different from their vehicles’ market value. Instead of fretting on the correct choice of IDV, it is important to realise what happens if you choose an IDV that may be lower or higher than your car’s market value.

Choosing a lower IDV may help you save on premium charges. However, this also means that in the event of a theft or gruesome accident, you will be compensated with a reduced claim amount. If the expenses on repairs exceed 75 percent of the car’s IDV, then the customer gets the claim amount from the insurance company equivalent to the IDV calculated.

Choosing a higher IDV means that the insurance company will be liable to pay you a higher amount in case of loss of your car. However, this would also translate into increased premium payments. Also, at times you may receive a delayed claim payment as the concerned insurance company would be looking for ways to reject your claim.

How to choose the right IDV for your car?

The ideal IDV amount must be comparable to the approximate market value of your car. The basic underlying factor for calculating the IDV of any vehicle is the selling price listed by the manufacturer. So, you may choose the right IDV amount by making use of the following basic calculation.

IDV = Showroom Selling Price of Your Car * Standard Depreciation Rate


The standard depreciation rates are detailed in the Motor Tariff Act and depend on your car’s age. Ideally, a standard depreciation of 10 percent is applied on the last year’s IDV to evaluate the current IDV value.

Buying a car insurance plan is akin to making a long-term financial investment. Hence, it is important to decide the IDV of your car wisely to ensure adequate claim amount, if and when required.

Disclaimer: Every detail provided in this website is for information purpose only. Insurancedekho under no circumstances, endorse the information provided. However, we are constantly doing our best to keep our privileged customers up-to-date with neutral and factual information.


This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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