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What does IDV mean in car insurance?

IDV or Insured Declared Value is nothing but the “Sum Insured” in a car policy. This is the amount you will receive as a settlement in the event of a total loss (beyond repair) of your car or if your car is stolen. Few online insurance aggregators, agents or brokers might tempt you with the lowest insurance premium but when you look carefully you could see the IDV of your car is reduced. So, think twice before opting for the lowest insurance premium.

Why is IDV important?

Let's give you an example, Jack purchased a car insurance policy for his new car from an insurance company which offered him the lowest premium without paying attention to the IDV. After a month, his car suffered serious damage in an accident resulting in a total loss. Unfortunately, due to low IDV, the claim amount could not fulfill Jack's expectations leading to capital loss.

Usually, an insurance policy is covered with two risks:

1.Own Damage and

2.Third-Party Risk

The third-party risk is mandatory by law. But when it comes to own damage, the insurance premium is fixed based on the IDV of the car. This becomes extremely important when you insure the car the first time.

IDV for a New Car:

For a new car, the IDV is calculated based on the ex-showroom price of the car minus depreciation. Usually, the depreciation for a new car is at 5 percent. So, the IDV would be 95 percent of the car's ex-showroom price.

Depreciation Rates:

Age of the vehicle

IDV Depreciation Percentage

Less than or equal to 6 months


Greater than 6 months but less than or equal to 1 year


Greater than 1 year but less than or equal to 2 years


Greater than 2 years but less than or equal to 3 years


Greater than 3 years but less than or equal to 4 years


Greater than 4 years but less than or equal to 5 years


IDV for an old car:

The IDV value for cars that are more than 5 years old are arrived through a mutual consensus between the insurance company and the policyholder. Keep in mind that, add-ons like zero depreciation might not be available for cars that are 5 years old.

To sum up, one should opt for a car insurance with a car insurance company that offers him/her the most optimum IDV for his/her car. This is the reason that made thousands of people choose Chola mandalam car insurance policy. Know more

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