IDV
Insured Declared Value is the current market value of a vehicle, and the maximum motor claim payout.
IDV is derived from the manufacturer's listed price minus depreciation for age. A lower IDV cuts the premium but also caps the total-loss or theft settlement you receive.
Why IDV matters when comparing products
The Insured Declared Value (IDV) is crucial when comparing motor insurance policies in India as it directly influences both the premium paid and the potential claim settlement for total loss or theft. A higher IDV leads to a higher premium but ensures a more comprehensive payout closer to the vehicle's market value. Conversely, a lower IDV reduces the premium but caps the maximum claimable amount, potentially leaving the policyholder underinsured in adverse scenarios.
Illustrative example
Suppose a car has a manufacturer's listed price of ₹10,00,000. After accounting for depreciation over two years, its IDV is ₹8,00,000. If the owner opts for this IDV, their annual premium might be ₹25,000. However, if the car is stolen, the maximum they would receive is ₹8,00,000. Choosing a lower IDV, say ₹7,00,000, might reduce the premium to ₹20,000, but would cap a total loss claim at ₹7,00,000.