IDV percentage

How much does the insured declared value of a car depreciates over time?

IDV calculation depends on the ex-showroom price for a new car. However as your car becomes old, the IDV takes into account the depreciation value of the car. IRDA offers a calculation chart for depreciation which is used by insurance companies to arrive at the IDV value for older cars. For cars less than 6 months old the Depreciation Percentage to calculate IDV is fixed at 5%. For cars between 6 months to 1 year the percentage is 15% and for 1 year to 2 years the percentage is 20%.

Hi Nisa,

You must know that the value of your insurance policy is based on the Insured Declared Value (IDV). Insured Declared Value is understood as the maximum sum that the insurance provider agrees to pay you in case of total damage to your vehicle. For a new car, the Insured Declared Value is calculated on the showroom’s listed price.

The Insured Declared Value of your vehicle does not remain constant. It changes every year with every renewal of your insurance policy. Now, why does the Insured Declared Value decrease?

On renewal of your Car Insurance policy after one year, the Insured Declared Value will decrease due to the rate of depreciation that is applicable on vehicles. The depreciation schedule usually starts from 6 months. Initially, the depreciation rate will be 5%, then it will be 15% when the car has been used for a year, from the second year, the depreciation rate will be 20% and will go up by 10% every year.

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Cheers,
BB Expert