Car Insurance IDV Explained: How Depreciation Changes Your Claim Amount

When you renew a car's own-damage cover, the Insured's Declared Value (IDV) is the number that sets the vehicle's sum insured for a total-loss, constructive-total-loss or theft settlement. This guide explains how IDV is calculated, why it is not the same as the on-road price, and how to compare it with deductibles and add-ons before accepting a renewal quote.

As of October 2026, official motor-policy documents use an age-based IDV depreciation schedule through five years, while vehicles older than five years or discontinued models are valued by agreement between the insurer and the insured. The practical takeaway is simple: do not compare a premium in isolation; read the IDV and the claim conditions in the policy schedule.

Key takeaways

• IDV is the own-damage sum insured and the main ceiling for a total-loss or theft settlement, subject to the policy, salvage and deductible.
• The standard age schedule reviewed as of October 2026 reduces the listed value by 5% to 50% for vehicles up to five years old.
• On a hypothetical listed value of ₹10,00,000, a vehicle in the more-than-one-year-to-two-year slab produces an illustrative IDV of ₹8,00,000.
• A constructive total loss (CTL) test is generally crossed when retrieval and repair costs exceed 75% of IDV, subject to the policy wording.
• IDV depreciation and depreciation deducted on parts during a partial-loss repair are different calculations.

Why IDV is worth checking now

Car insurance comparisons are back in focus after recent reporting on proposed IRDAI changes to insurance distribution commissions. Those proposals concern how policies are sold and distributed; they do not remove the need to check the basic numbers in a policy schedule. For an owner, the durable question is still whether the IDV, deductibles, exclusions and add-ons match the vehicle and the way it is used.

That is also why a lower quote is not automatically a better comparison. IRDAI's policyholder guidance specifically says that premium, deductibles, coverage and IDV should be compared together because a lower premium can come with lower protection. The sections below keep the focus on the policy term that matters most in a very large loss.

What IDV means in car insurance

IDV is the sum insured for the own-damage section of a motor policy. The standard private-car wording published by New India Assurance says that it is fixed at the start of each policy period using the manufacturer's listed selling price for the insured brand and model, adjusted for age-based depreciation. Fitted accessories may also be included, subject to the policy schedule.

• For theft or total loss: the policy wording generally uses the IDV, including insured accessories, less the value of the wreck or salvage and applicable excess.
• For a CTL: the policy assesses whether the aggregate retrieval and repair cost exceeds the stated percentage of IDV. The official policy documents reviewed as of October 2026 use 75% as the CTL threshold.
• For a partial loss: the insurer may repair or replace damaged parts, with reasonable costs subject to part depreciation, deductibles, exclusions and the rest of the policy terms.
• For third-party liability: IDV is not the limit for another person's injury, death or property-damage liability. That is a separate section of the motor policy.

In other words, IDV is not a promise that every accident repair will be paid up to that amount. It is the declared value used mainly when the vehicle is stolen or the loss is treated as total or constructive total loss.

How age-based depreciation changes IDV

The age slab is applied to the manufacturer's listed price used for the policy, not to a random number chosen after an accident. The six slabs below are reproduced in official insurer policy documents available as of October 2026. The ₹10,00,000 column is an illustration of the arithmetic; the actual schedule can differ because of the vehicle variant, accessories, policy wording and the agreed value for older vehicles.

For cars older than five years, and for obsolete models that the manufacturer has discontinued, the official wording says that the IDV is determined by an understanding between the insurer and the insured. That makes the policy schedule and the valuation discussion more important than applying the five-year table mechanically.

Worked example: IDV and the 75% CTL test

Take a hypothetical car whose insurer uses a listed value of ₹10,00,000 as of October 2026. Assume that, at renewal, it falls in the more-than-one-year-to-two-year slab.

1. Age-based depreciation: 20% of ₹10,00,000 = ₹2,00,000.
2. Illustrative IDV: ₹10,00,000 − ₹2,00,000 = ₹8,00,000.
3. CTL reference point: 75% of ₹8,00,000 = ₹6,00,000.

If the aggregate cost of retrieval and repair is more than ₹6,00,000, the vehicle may meet the CTL test under the stated policy wording. That does not mean every estimate above the line produces an automatic cash payment: the insurer still applies the policy terms, assessment, excess, salvage or wreck treatment and required documentation. The example only shows why a lower IDV can move the CTL reference point downward.

IDV depreciation is not the same as part depreciation

Two different calculations are often mixed up at renewal. The age table above is used to arrive at the vehicle's IDV for total-loss or CTL purposes. A partial-loss claim is instead settled using the reasonable repair or replacement cost, subject to the depreciation limits for the damaged parts, the compulsory or voluntary excess and any exclusions.

A nil- or zero-depreciation add-on changes how depreciation is applied to eligible parts during an admitted own-damage claim. It does not automatically increase the base IDV, turn a third-party policy into own-damage cover, or guarantee payment for excluded damage. The add-on is subject to its own eligibility, part list, claim limits, deductible and policy wording. IRDAI lists nil-depreciation and return-to-invoice cover among common motor add-ons, while current insurer wording makes clear that the exact terms vary.

For a deeper comparison of the add-on itself, see the zero-depreciation versus regular insurance guide. Keep the distinction in mind: a zero-dep add-on may reduce deductions in a repair claim, whereas IDV is the declared value used for a large-loss settlement.

How to compare IDV at renewal

Use the policy schedule as the comparison sheet, not just the first premium figure shown on a quote. The following points make two quotes easier to compare:

• Confirm the vehicle identity: check registration number, make, model, variant, manufacturing or registration details and fuel type.
• Check the IDV: compare the proposed number with the previous schedule and the age slab. Ask how fitted accessories or declared modifications have been treated.
• Separate own-damage from third-party cover: a low own-damage premium does not change the statutory third-party liability section.
• Record every excess: note the compulsory deductible, any voluntary deductible and any additional excess attached to an add-on.
• Read the total-loss wording: check whether the settlement refers to IDV less salvage, wreck value or other deductions.
• Check add-on boundaries: verify the eligible parts, number of claims, vehicle-age limit and exclusions for nil depreciation or return-to-invoice cover.
• Keep renewal evidence: save the schedule, inspection photographs, RC, invoice for a new car and records of declared accessories.

The site’s car insurance renewal checklist covers the timing and documentation questions that sit alongside this IDV check. If the comparison is being made mainly to reduce the annual bill, the guide to reducing car insurance premium explains which levers affect price without treating a lower IDV as a free saving.

Common IDV mistakes to avoid

• Confusing on-road price with IDV: the policy starts with the manufacturer's listed price and the stated depreciation method; registration, road tax and every ownership expense are not automatically the insured vehicle value.
• Choosing the lowest IDV without reading the consequence: it may reduce the quoted own-damage premium, but it also lowers the reference value for theft, total loss and CTL calculations.
• Assuming zero depreciation means zero out-of-pocket cost: deductibles, exclusions, consumables, non-covered damage and policy limits can still apply.
• Using the age table for a partial repair: the table is for fixing IDV; a repair claim follows the part-depreciation and excess rules in the policy.
• Ignoring accessories and modifications: an accessory that is not declared or endorsed may not be valued in the same way as an insured accessory.

What to check before accepting a renewal

1. Download the proposed policy schedule and highlight the IDV, vehicle details and policy period.
2. Match the vehicle age to the applicable IDV depreciation slab shown above as of October 2026.
3. Calculate the illustrative total-loss and CTL reference points, then compare them with the prior policy's values.
4. List the compulsory excess, voluntary excess, add-on excesses and salvage or wreck wording.
5. Read the own-damage exclusions and confirm whether the desired add-ons are actually printed in the schedule.
6. Keep the final quote, proposal details and payment receipt together so a later claim is based on the same declared information.

FAQ

Is IDV the same as the car's on-road price?

No. IDV is derived from the manufacturer's listed price for the insured brand and model, adjusted under the applicable depreciation schedule, with eligible accessories considered according to the policy. The complete on-road amount paid by an owner is not automatically the IDV.

What happens if the IDV is too low?

A lower IDV can lower the reference point for theft, total-loss and CTL settlements. It may also make a quote look cheaper, so the meaningful comparison is the combined effect of IDV, deductibles, exclusions and add-ons.

Does zero depreciation increase IDV?

Usually no. Nil or zero depreciation is an optional add-on that changes depreciation treatment for eligible parts in an admitted own-damage repair claim. It does not replace the base own-damage cover or automatically change the IDV used for total loss.

How is IDV decided after five years?

For vehicles beyond five years, official policy wording says the IDV is determined by agreement between the insurer and the insured. The schedule should show the agreed value; it should not be assumed that the five-year 50% slab is the permanent value for every older car.

Does IDV set third-party compensation?

No. IDV belongs to the own-damage section. Third-party injury, death and property-damage liability are handled under a separate section and the applicable law and policy limits.

Sources

• IRDAI, “Motor Insurance – Policy Holder” (accessed 8 Oct 2026).
• The New India Assurance Company, “Standard Form for Private Car Base Package Policy” (accessed 8 Oct 2026).
• United India Insurance, “Customer Information Sheet” with IDV depreciation schedule (policy dated 2 Jul 2025; accessed 8 Oct 2026).
• SBI General, “Zero Depreciation Car Insurance” (accessed 8 Oct 2026).
• Business Standard / Reuters, “Insurance brokers oppose IRDAI’s proposed reforms, warn of job losses” (6 Oct 2026).
• India Today, “Why insurance brokers are opposing IRDAI’s proposed commission reforms” (6 Oct 2026).
• Wikimedia Commons, “U.S. Customs & Border Protection Vehicle Inspection” (25 Aug 2009; public-domain photograph, accessed 8 Oct 2026).

This article is for general information only and is not financial, insurance or legal advice.