IDV Explained with Calculation Examples
What Insured Declared Value is, how it is worked out from the manufacturer's listed selling price and the vehicle's age, how accessories and CNG kits are treated, and what a higher or lower IDV actually changes.
What IDV is
Insured Declared Value (IDV) is the sum insured for the vehicle under Section I (Own Damage) of a motor policy. It is the most the insurer will pay on a total loss or theft. Third-party liability under Section II is not linked to it.
IDV is a formula value, not a valuation of one particular car, which is why it can differ from what the car would actually fetch in the market.
How it is worked out
Start with the manufacturer's listed selling price of the make and model, the ex-showroom price. Factory-fitted accessories are already inside that price, so they are part of the base IDV. Then deduct depreciation for the vehicle's age under the schedule carried over from the India Motor Tariff.
The schedule is 5% up to 6 months, 15% up to 1 year, 20% up to 2 years, 30% up to 3 years, 40% up to 4 years and 50% up to 5 years. Each band includes its upper limit: a vehicle more than 2 but not more than 3 years old is in the 30% band.
For a vehicle more than 5 years old, and for obsolete models, the IDV is agreed between the insurer and the insured. Insurers often inspect the vehicle before agreeing a value.
Accessories and CNG kits
Accessories fitted after purchase are outside the listed selling price. They are covered only when declared to the insurer, with their value added to the IDV.
A retrofitted CNG or LPG kit must be endorsed on the registration certificate and declared to the insurer, with the additional premium paid. If it is not, the kit itself is not covered, and the insurer may reduce or repudiate the wider claim, depending on the policy terms and whether the kit had a bearing on the loss. A factory-fitted kit is part of the vehicle.
Choosing within the range
Insurers commonly offer a range of IDV values. Choosing the lower end reduces the own-damage premium and, equally, the maximum payout on a total loss or theft. It does not change third-party cover, claim speed or the No Claim Bonus.
Rules at a glance
The undeclared CNG kit
Farida, 38, has a CNG kit retrofitted to her petrol sedan in Ahmedabad for ₹70,000. It is endorsed on the registration certificate, but she does not tell her insurer. A year later the car is badly damaged in a collision.
The undeclared kit is not covered. The rest of the claim depends on the policy terms and on whether the kit had a bearing on the loss: the insurer may reduce or repudiate it. Had she declared the kit and paid the additional premium, it would have been covered.
IDV at two successive renewals
- Listed selling price of the model: ₹8,00,000. Age at renewal: 2 years 4 months, so the 30% band applies.
- Depreciation = ₹8,00,000 × 30% = ₹2,40,000.
- IDV = ₹8,00,000 − ₹2,40,000 = ₹5,60,000.
- Next renewal: 3 years 4 months, so the 40% band. Taking the listed price as unchanged, for arithmetic only, IDV = ₹8,00,000 × (1 − 0.40) = ₹4,80,000.
Result. IDV is ₹5,60,000 this year and ₹4,80,000 the next, a fall of ₹80,000 from moving into the next age band.
Key points
- IDV is the sum insured under Section I (Own Damage) and the ceiling for a total-loss or theft payout under the base cover (a Return to Invoice add-on can pay more).
- IDV is the manufacturer's listed selling price, plus declared accessories, less depreciation for age.
- Beyond 5 years, and for obsolete models, IDV is agreed between insurer and insured.
- Factory-fitted accessories are in the base IDV; aftermarket ones and retrofitted CNG kits must be declared.
- A lower IDV lowers the OD premium, the maximum payout and the 75%-of-IDV total-loss threshold; it does not change third-party cover, claim speed or NCB.
Common misunderstandings
- IDV is not the resale price of the car; it is a formula value and may be higher or lower than the market would pay.
- IDV is not paid on every claim; it is the ceiling for total loss or theft, while a repair claim is paid on the assessed cost of repair.
- A lower IDV does not reduce the third-party premium.
Questions people ask
My car is two and a half years old. Which rate applies?
30%. A vehicle more than 2 but not more than 3 years old is in the 30% band, so a model listed at ₹10,00,000 would have an IDV of ₹7,00,000.
How is IDV fixed for a seven-year-old car?
By agreement. The schedule stops at 5 years, so the insurer and the insured settle on a value, often after an inspection.
Are the alloy wheels that came with the car covered?
If factory-fitted and included in the manufacturer's listed selling price, they are part of the base IDV. Only accessories fitted afterwards need separate declaration.
What this lesson relies on
- India Motor Tariff — provisions on Insured's Declared Value and the age-wise depreciation schedule, as carried into current motor policies
- Standard motor package policy wording — Section I (Own Damage)
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.