Insured Declared Value or IDV is the maximum sum assured fixed by an insurer, which is provided to the policyholder in case of theft or total loss of vehicle.

Calculation of the IDV is based on the vehicle manufacturer’s selling price after deducting depreciation from it. The formula to calculate the IDV of a car is as follows:

Insured Declared Value (IDV) = (Manufacturer’s listed price - depreciation) + (Cost of accessories not included in the listed price - depreciation of these parts)

This formula is based on the assumption that a car might be equipped with additional accessories that weren’t part of the vehicle when it was being purchased. However, if a car doesn’t have any accessory, then the IDV calculation changes to:

Insured Declared Value = Manufacturer’s listed price - depreciation

Depreciation for vehicles is calculated differently based on whether the policyholder is applying for a total loss claim or a partial loss claim. This is the rate of depreciation considered for a total loss claim:

Vehicle's age

Percentage depreciation (for IDV calculation)

Less than 6 months

5%

More than 6 months but not exceeding 1 year

15%

More than 1 year but not exceeding 2 years

20%

More than 2 years but not exceeding 3 years

30%

More than 3 years but not exceeding 4 years

40%

More than 4 years but not exceeding 5 years

50%

More than 5 years

The IDV is calculated based on a mutual agreement between the insurer and the policyholder.

This is the rate of depreciation for car parts when the policyholder has raised a claim for partial loss:

Age of the car

Percentage depreciation

Below 6 months

Nil

6 months to 1 year

5%

1 year to 2 years

10%

2 - 3 years

15%

3 - 4 years

25%

4 - 5 years

35%

5 - 10 years

40%

More than 10 years

50%