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How to choose the right IDV without over or under insuring
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Introduction
The Insured Declared Value, or IDV, is one number on your car insurance renewal notice that most car owners never question. It comes pre-filled, the premium is calculated on top of it, and most people pay without checking whether the figure is accurate. That is a mistake. An IDV that is too high means you are paying a larger Own Damage premium than you need to. An IDV that is too low means you receive less than the car is worth if it is stolen or damaged beyond repair. Neither outcome serves you.
In this blog, we are going to cover what the IDV actually is, how it is calculated, what goes wrong at both extremes, how to find the right figure for your car at renewal, and how the IDV connects to your premium and No Claim Bonus.
Keep in mind
The IDV is the current market value of your car, it is the maximum the insurer will pay in a total loss or theft claim
The IDV is calculated by deducting depreciation from the manufacturer's listed price, using a schedule set by IRDAI
A higher IDV means a higher Own Damage premium, but it does not automatically mean a better payout on every claim
A lower IDV reduces your premium but reduces the maximum payout on a total loss claim proportionally, you cannot set a low IDV to save money and then expect a full market-value payout
The IDV should reflect what the car would actually sell for in the used market today, nothing more, nothing less
What the IDV actually is
The Insured Declared Value (IDV) is the current market value of your car at the time the policy is issued or renewed. It is the figure the insurer uses as the ceiling for any Own Damage payout, the most you can receive in a claim where the car is stolen or damaged beyond repair.
The Insurance Regulatory and Development Authority of India (IRDAI) defines how the IDV is calculated. It is not a number the insurer or the car owner makes up, it follows a regulated formula based on the car's original manufacturer's listed price and the depreciation that has accumulated since purchase.
The IDV matters most in 2 situations:
Total loss
When repair costs exceed a certain percentage of the IDV, the insurer declares the car a total loss and pays out the IDV instead of repairing it
Theft
If the car is stolen and not recovered, the insurer pays the IDV
For partial damage claims, a dented bumper, a cracked windscreen, a scraped door, the IDV is not the payout figure. The insurer pays the actual repair cost for the damaged parts, subject to the compulsory deductible and any depreciation deduction (unless you hold a Zero Depreciation optional cover).
How the IDV is calculated
The IDV starts from the manufacturer's listed selling price of the car, not the on-road price, not the price you paid, but the ex-showroom price listed by the manufacturer at the time of the calculation.
From that starting point, IRDAI sets the depreciation percentages that reduce the IDV each year:
For example: If your car's manufacturer-listed price is ₹10 lakh, and the car is 3 years old, the applicable depreciation is 40%. The IDV would therefore be:
₹10,00,000 - 40% depreciation (₹4,00,000) = ₹6,00,000 IDV
This is the base IDV before considering any separately valued accessories or other applicable adjustments.
For cars over 5 years old, the IDV is determined by mutual agreement between the insurer and the car owner, there is no fixed IRDAI schedule beyond 5 years, which is where accurate IDV-setting becomes particularly important.
Fitted accessories that are not factory-standard, a music system, a CNG kit, alloy wheels, or a sunroof added after purchase, are typically valued separately and added to the IDV at a separately agreed depreciated value. Check your policy document to see how fitted accessories are handled on your specific plan.
The Own Damage (OD) premium, the part of your comprehensive premium that is not fixed, is calculated as a percentage of the IDV. A higher IDV produces a higher OD premium. A lower IDV produces a lower OD premium.
What happens when the IDV is set too high
Setting the IDV above the car's actual current market value, what it would fetch if sold today, means you are over-insured. Over-insurance has 2 practical consequences.
You pay a higher premium than necessary: The OD premium is proportional to the IDV. If the IDV is inflated by ₹1 lakh above the actual market value, the OD premium is correspondingly higher, and the Goods and Services Tax (GST) at 18% applies on top of that inflated premium.
A higher IDV does not always mean a higher payout: Insurance is meant to cover your actual loss, not give you more money than the car is worth. If your policy shows an IDV of ₹6 lakh but the car is worth around ₹4.5 lakh in the market, you may not receive the full ₹6 lakh if the car is declared a total loss.
The result: You could end up paying a higher premium for an IDV that does not reflect your car's actual value.
What happens when the IDV is set too low
Setting the IDV below the car's actual current market value, to reduce the OD premium, is the more common mistake, and the more costly one at claim time.
You pay a lower premium, but the payout gap is real: If the car is stolen or declared a total loss in an accident and the IDV on the policy is ₹3 lakhs but the car would sell for ₹4.5 lakhs in the used market, the insurer pays ₹3 lakhs, nothing more. The ₹1.5 lakh gap comes entirely from your pocket.
Partial claims are also affected: For partial damage claims, the compulsory deductible applies. For cars up to 1,500cc, such as a Honda City or a Hyundai Verna, the compulsory deductible is ₹1,000. For cars above 1,500cc, such as a Hyundai Creta or a Kia Seltos, it is ₹2,000. A low IDV does not change the deductible, but it does reduce what the insurer considers a reasonable repair estimate relative to the car's declared value, which can affect surveyor assessments.
The premium saving is smaller than it appears: The OD premium as a percentage of IDV is the same regardless of whether the IDV is accurate or deflated. The money saved by underinsuring is a small fraction of the payout gap you accept in return.
How to find the right IDV for your car
The right IDV is the one that most accurately reflects what the car would sell for in the used car market today. Here is how to arrive at that figure before your next renewal.
Check used car listing platforms for your exact make, model, variant, year, and mileage
Platforms that list used cars give you a real-world view of what buyers are paying for cars like yours. Look at cars of the same year, variant, and approximate mileage in your city. The mid-point of the price range you find is a reasonable proxy for your car's current market value.
Compare that figure against the IDV on your renewal notice
If the insurer's IDV is meaningfully higher or lower than the market price range you found, ask the insurer if the IDV can be adjusted. Most insurers allow the IDV to be changed within a set range at renewal, so you can request a revision before the policy is issued.
For cars over 5 years old, negotiate actively
Beyond 5 years, the IDV is set by agreement, there is no fixed IRDAI depreciation schedule. This means the insurer's default IDV for an older car may not reflect what your specific car is actually worth. A well-maintained 8-year-old car with low mileage may be worth more than an identical car with high mileage. Provide evidence of the car's condition and mileage to support a more accurate IDV.
Do not accept the pre-filled IDV without checking it
Online renewal platforms often pre-fill the IDV from the previous year's figure after applying the next depreciation step. This is not always accurate, market conditions, demand for your car model, and your car's specific condition all affect the actual value.
When to reconsider the IDV, and how often
It is worth checking your IDV at every renewal, as well as after major changes to your car. Here are the situations where a review matters most.
At every annual renewal
Your IDV generally falls each year as depreciation is applied. But your car's actual resale value may not fall at the same rate. Popular models with strong resale demand, for example, may be worth more than the standard depreciation calculation suggests. Compare your renewal IDV with similar cars in the used-car market.
After a major accident or repair
A car with a significant accident history may be worth less than a similar car with no accident history. If your car has undergone major repairs, check whether its IDV still reflects its current market value.
After major modifications or upgrades
Additions such as an authorised CNG kit, sunroof or upgraded audio system may increase your car's value. If these are declared to the insurer, they may be included separately when calculating the IDV. Check with your insurer about how these additions are valued.
When your car crosses 5 years
This is an important point to review your IDV because there is no fixed IRDAI depreciation schedule after five years. The IDV is agreed between you and the insurer, so compare it with your car's current market value before renewing.
What Kiwi Insurance does differently
Your IDV affects the Own Damage premium, and your No Claim Bonus (NCB) discount is then applied to that OD premium at renewal. Choosing an IDV that accurately reflects your car's value ensures that both the premium and NCB discount are based on the right figure.
Kiwi Super NCB gives you an additional advantage:
Builds up to 90%
Kiwi Super NCB can go up to 90%, compared with the 50% limit of a standard NCB. This means you can get a higher discount on your OD premium at renewal.
Drops by one level after a claim
If you make a claim, your Super NCB moves down by one level instead of resetting to zero.
Up to 40% more discount
At the same stage, Super NCB can provide up to 40% more discount than a standard NCB, helping you retain more of your renewal benefit.
The value of any NCB discount ultimately depends on the OD premium, which is why getting your IDV right remains important.
To review your car insurance options and see how IDV and Super NCB work together on your plan, check your Kiwi policy document at renewal.
Conclusion
The right IDV is the one that matches what your car would actually sell for today, not higher, not lower. Setting it too high costs you in premium without delivering a matching payout. Setting it too low reduces your premium but creates a real gap at claim time. The IDV should be reviewed at every renewal, actively at the 5-year mark, and whenever the car's condition or the market changes.
With Kiwi Insurance, getting the IDV right at renewal also means the Super NCB discount applies to an accurate OD premium, so the discount is as large as it can honestly be.
Unsure whether the IDV on your renewal notice reflects what your car is actually worth?
Head to Kiwi Insurance to review your car insurance, check your IDV, and renew with the right cover in place.
Written by
Reuben Solomon
Lead Content Writer
Reviewed by
Rupinderjit Singh
Head - Tech Product & Digital Business
Frequently asked questions
The Insured Declared Value (IDV) is the current market value of your car as declared on the insurance policy. It is the maximum the insurer will pay in a total loss or theft claim. It is calculated using the manufacturer's listed price minus depreciation, following a schedule set by the Insurance Regulatory and Development Authority of India (IRDAI). The IDV is not what you paid for the car, it is what it is worth today.