Role of IDV at the time of car insurance renewal

A vehicle is an asset that depreciates in value with time. As a result, car insurance purchases and car insurance renewals take in to account the Insured Declared Value or IDV. IDV is nothing but the current market value of the car. But it is not the resale value. It is the amount you shall receive in case your insured car undergoes total loss. Insurance companies follow fixed guidelines stated by the Insurance Regulatory and Development Authority of India (IRDAI) to calculate the IDV.

IDV at various levels

Let us now look at the IDV of a car at its various life stages:

  • IDV of a new car: As soon as the car leaves the showroom, it depreciates in value. The IDV of a new car, that is less than six months old, is 5%.
  • IDV of a one-year-old car: If your car is aged between six months and one year, a 15% IDV will be applicable.
  • IDV of a two-year-old car: An IDV of 20% will be applicable on vehicles aged between one and two years.
  • IDV of a three-year-old car: If your vehicle is less than three years but more than two years old, the IDV will be fixed at 30%.
  • IDV of a four-year-old car: An IDV of 40% is applicable for vehicles aged between three and four years.
  • IDV of a five-year-old car: If your car is aged between four and five years, it will depreciate by 50% in value.

Keep these figures in mind as they will help you to properly understand your premium and cover at the time of car insurance renewal.

Impact of IDV

When you look for an online car insurance renewal, you will first be asked to enter the age of your car. Only then can an insurance provider tell you what your exact cover will be based on the IDV. The IDV is related to the age of the car. When you look for car insurance online, you will notice that the insurance premium of an older car is lower. The overall insurance cover is lower in terms of value. You pay a lower premium for a lower cover.

Make sure it is calculated properly. You should always look to get the highest car insurance cover, in every scenario. If your car is just about two years old, you should not agree to an IDV higher than 20% when you go for your online car insurance renewal.

Choosing the right cover

Always look to find the best car insurance plan online. There are many options, so you must compare. Unless you compare, you won’t be able to find the best deal. If you aren’t satisfied with the cover after the IDV deductions, look for insurers who have special riders that offer a higher cover. You can customize your car insurance online by purchasing some add-on covers, also known as riders. The zero-depreciation rider is especially helpful here. Explore your options carefully and find the best possible car insurance policy.

The final word

IDV is a lot crucial at the time of car insurance renewal. So, make sure you have the IDV of your car calculated properly as that will fetch you the best and the most appropriate cover. Keep all the points mentioned above in mind and renew your car insurance cover with ease. Ensure to make an informed choice by reading the policy’s terms and conditions. It is important to always have an active car insurance plan, so do renew the cover on time and keep your vehicle insured.


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