# Insured Declared Value (IDV)

Team Digit, 14 Aug 2018

Anyone who has insurance may have heard the term ‘IDV’. But who knows what it really stands for? Indian Driver Vehicle? Interesting Dolphin Vacancy? Intense Dangerous Viking?!

So what is the full form of IDV?

Turns out, it’s Insured Declared Value in the context of Car Insurance. Phew!

Now that we’ve covered what is IDV full form, let's see what IDV means, IDV Calculator, and why IDV is important.

What does IDV mean in insurance?

IDV is the maximum amount your insurance provider can give you, in case your car is stolen or totally damaged.

IDV Calculator

People often search for the IDV Calculator since it means the amount your car is worth in today’s market. IDV Calculator takes into account some basic information about your car – such as its manufacturer, make and model, the region in which it is registered, its fuel type, cubic capacity, and so on to arrive at the prevailing ex-showroom price. Then, it takes into account the standard depreciation rates of the Indian Motor Tariff for your car. You then put them together, and voila! You’ve got your the Insured Declared Value for your car!

Your car’s value depreciates from the moment you drive it out of the showroom – and the percentage of its depreciation increases with each year. Here’s how your depreciation percentage increases with time:

• 6 months and below - 5%
• 6 months to 1 year - 15%
• 1-2 years - 20%
• 2-3 years - 30%
• 3-4 years - 40%
• 4-5 years - 50%
• 5+ years - IDV mutually decided by the insurance provider and policyholder

So, for example, if your car is less than 6 months old and its current ex-show room price is Rs. 100, the depreciation rate is only 5%. Which means that after its purchase, your IDV drops to Rs. 95 – dropping to Rs. 85 for vehicle age exceeding  6 months but not exceeding 1 year, Rs. 80 for vehicle age exceeding 1 year but not exceeding 2 years, Rs. 70 for vehicle age exceeding 2 years but not exceeding 3 years , and so on – until it is Rs. 50 after 50% depreciation in its 5th year. If your car is more than 5 years old, the IDV depends on the condition of the car – the manufacturer, model, and availability of its spare parts.

Does IDV effect car insurance premium?

Yes, the car insurance premium for your vehicle is determined by several factors, the most important of which is your Insured Declared Value (IDV) i.e. the current market value of your vehicle. Car insurance premium increases with a higher IDV.

How to select the Right IDV for your car?

The Insured Declared Value and your car insurance premium go hand in hand. This means, the higher your IDV is, the higher your car insurance premium – and as your vehicle ages and IDV depreciates, your premium also decreases. Also, when you decide to sell your car, a higher IDV means you’ll get a higher price for it. Price may also be affected by other factors like usage, past car insurance claims experience etc.

So, when you’re choosing the right car insurance policy for your car, remember to make note of the IDV being offered, and not just the premium. A company offering a low premium may be tempting, but this could be because the IDV on offer is low. In case of total loss of your car, a higher IDV leads to higher compensations.

At the time of resale, your IDV is indicative of the market value for your car. However, if you have maintained your car really well and is shining as good as new, you can always aim at a price more than what your IDV might offer you. At the end of the day, it all boils down to how much love you have showered on your car.

So, to know what your precious belonging is worth, know the in and out of your IDV!

Explain it like I'm five

We're making insurance so simple, now even 5-year-olds can understand it.

You own an expensive watch. One day, you decide to find out how much you would get if you sold it. You take it to a watchmaker. The watchmaker looks at your watch, and explains that it is made of glass, metal, leather and screws. So, he first adds up the cost of those materials. He then asks you how old the watch is, and you tell him that it is 5 years old. He writes that down as well. Based on all of this, he tells you that if you sold your watch, you would get Rs. 500.

In this case, Rs. 500 is your IDV.!

#### Team Digit

Digit is a General Insurance company on a mission to Make Insurance Simple for people. We are backed by Fairfax, one of the largest insurance companies in the world.