IDV

IDV, the Insured’s Declared Value, is the sum insured on your vehicle under the own-damage part of a motor policy. It’s the most the insurer pays if the vehicle is stolen or a total loss, and it’s fixed at the start of each policy year.

What IDV is for

Your own-damage cover pays to repair your vehicle after an accident, but if it is stolen or so badly damaged that repair makes no sense, a total loss, the insurer pays the IDV instead. So IDV is the ceiling on that worst-case payout. It roughly tracks the current market value of your vehicle, falling each year as the vehicle ages, because an older vehicle is worth less to replace.

How it is set

Under IRDAI’s 2024 rules, each insurer’s product committee approves its own basis for IDV and the depreciation scale, publishes it, and shows it with an illustration in the policy’s Customer Information Sheet. There is usually a little room to adjust the IDV up or down within a band when you buy or renew.

The premium trade-off

Choosing a lower IDV cuts your own-damage premium, which is tempting, but it also cuts what you would receive if the vehicle were stolen or written off. So it is a trade-off between saving a little today and a smaller payout later. Setting the IDV close to the real value usually makes most sense. See motor insurance explained.