Table Of Content
Introduction
The IDV calculator is a useful tool for car owners in India. It helps them easily calculate the Insured Declared Value of their vehicle, allowing them to make an informed decision when buying or renewing car insurance. Among the various factors influencing the IDV calculator results, one of the key ones is depreciation.
In this blog, we break down the basics of IDV in car insurance, with a focus on how IDV calculators work and how depreciation impacts the results.
What is IDV in Car Insurance?
IDV stands for Insured Declared Value in car insurance. It is the highest amount the insurer will compensate if your car is stolen or suffers irreparable damage.
The insured declared value or IDV of your car is treated as its current market value after deduction of depreciation. In the event your car suffers a total loss or constructive total loss, the insurer will offer compensation based on the vehicle IDV.
When you buy or renew car insurance, you get to pick the IDV. Remember that the IDV you choose plays a key role in determining your coverage and policy premiums.
For example, suppose you have comprehensive car insurance with an IDV of ₹7,00,000. If your car gets stolen and is not recovered, you can file an insurance claim. The car insurance company will then offer you maximum compensation of ₹7,00,000.
Read More: IDV in Car Insurance: Meaning and Calculation
What is an IDV Calculator and How Does it Work?
An IDV calculator in car insurance is an online tool that lets you calculate the Insured Declared Value of your car. It utilises details like your car’s make, model, variant and age to determine its IDV. You can use it as a reference when selecting IDV at the time of buying or renewing car insurance online.
The IDV Calculator for Car is a free tool that uses two simple formulas to calculate your vehicle’s IDV. You can either enter your car’s registration number on the tool or its make, model, variant and registration year to get the results. For cars with no added accessories, it calculates IDV by deducting age-based depreciation from the car’s ex-showroom price.
For cars with added accessories, the IDV calculation formula is (car’s ex-showroom cost - age-based depreciation) + (price of accessories - depreciation of accessories). You can easily find an IDV calculator for commercial vehicle or private vehicle insurance online.
For example, suppose you want to calculate the IDV of your 1.5-year-old commercial car with an ex-showroom price of ₹10,00,000. When you enter the required details on the IDV calculator for a commercial vehicle, it will show an IDV of ₹8,00,000 by factoring in the applicable depreciation rate.
How Does Depreciation Affect Car Insurance IDV Calculator Results?
Depreciation is the loss of your vehicle’s value due to wear and tear over time. It systematically lowers the IDV calculator results for your car every year. The IRDAI has a fixed depreciation rate schedule for determining IDV in car insurance.
IDV Calculator for Car in motor insurance takes the vehicle age into consideration and deducts age-based depreciation from the car’s original ex-showroom price. This systematic reduction makes sure that the claim payout matches your car’s depreciated market value at the time of a total loss or constructive total loss claim.
As per IRDAI, the depreciation rate is 5% for cars aged under 6 months, 15% for cars aged between 6 months and a year, 20% for cars aged between 1 and 2 years, 30% for cars aged between 2 and 3 years, 40% for cars aged between 3 and 4 years, and 50% for cars aged between 4 and 5 years. For cars older than 5 years, the rate is negotiated between the policyholder and the insurer.
In the case of calculating a 3.5-year-old car’s insured declared value, the IDV calculator will consider a 40% standard depreciation in the calculation. But if the vehicle age becomes 4.5 years, it raises the depreciation rate to 50%, which, in turn, affects the calculator results, lowering the IDV.
What is the Ideal IDV for Your Car Insurance Policy?
By considering your car’s present depreciated market value, your coverage requirement and budget, you can pick the ideal IDV for your vehicle. For a reliable baseline figure, you can use an online IDV calculator for commercial vehicle or private vehicle insurance.
When buying or renewing car insurance online, insurers generally allow you to adjust your vehicle's IDV by 10% to 15%. While fixing the IDV higher increases your total coverage, it also raises your policy premium.
In contrast, fixing it too low helps you make upfront savings on premiums but leaves you underinsured. Finding the right balance between adequate coverage and an affordable premium is the key to choosing the right IDV.
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