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What is the Impact of Depreciation on Your Car Insurance Policy?

What Factors Affect the Car Depreciation Rate?

How to Calculate Depreciation in Car Insurance?

The car’s age and Insured Declared Value (IDV) determine its depreciation value. The older the car, the higher the depreciation incurred. The manufacturing year of the car is also considered while calculating the depreciation on car parts. 

Your insurance company will calculate the exact amount of depreciation after considering the routine wear and tear for various car parts like tires and tubes, nylon parts, wooden inserts, batteries and airbags, fibreglass, and paint, excluding the glass parts.   

The Insurance Regulatory and Development Authority of India (IRDAI) has regulated the depreciation rates on different parts of the car as follows. 

Parts Wise

Depreciation Rate (%)

Rubber, Nylon and Plastic Parts


Fiber Glass




Car Paint

50% depreciation on the material cost of total painting charges. 25% of the total painting charges (in case of consolidated bill of painting charges).

How to Reduce the Impact of Depreciation on Car Insurance?

FAQs about Impact of Depreciation in Car Insurance