Motor insurance · insured declared value
Insured declared value is the most your insurer will ever pay if your vehicle is stolen or written off. It is worked out from the current ex-showroom price of the same make and model, less a fixed depreciation percentage set by the vehicle's age.
Take the current ex-showroom price of the same make, model and variant, as listed today rather than what you paid. Subtract the depreciation percentage that applies to the vehicle's age. What remains is the insured declared value, and it is the ceiling on any total-loss or theft settlement.
The schedule is fixed and applies across every insurer, so it is not something to negotiate. What is worth checking is the base it is applied to: registration charges and road tax are excluded, and accessories fitted after purchase are valued separately and added on top only if you declare them.
| Age of the vehicle | Depreciation | Share of price retained |
|---|---|---|
| Under 6 months | 5% | 95% |
| 6 months to 1 year | 15% | 85% |
| 1 to 2 years | 20% | 80% |
| 2 to 3 years | 30% | 70% |
| 3 to 4 years | 40% | 60% |
| 4 to 5 years | 50% | 50% |
| Over 5 years | Not tabulated | Agreed with the insurer |
The schedule stops at five years. For older vehicles the IDV is a matter of agreement between the insurer and the insured, usually informed by a condition report or the going used-market rate.
This is where owners lose money without noticing. With no table to point at, the number an insurer offers on a seven-year-old commercial vehicle can be well below what the vehicle would actually fetch, and the owner only finds out after a theft. If you run older vehicles, negotiate the IDV at renewal and keep the correspondence.
Premium is a percentage of IDV, so cutting the IDV cuts the premium. That makes it a convenient lever at renewal: quote a lower IDV, show a lower price, win the renewal. The owner sees a cheaper policy and does not see that the theft cover has shrunk with it.
The gap only shows up once, at the worst possible moment. If your vehicle is worth eight lakh and the policy carries an IDV of six, a theft leaves you two lakh short with no recourse, because you agreed to the figure when you paid the premium.
The opposite error costs money too. An inflated IDV does not increase a settlement, because the claim is capped at actual loss, so the extra premium buys nothing at all.
The schedule is the same for a two-wheeler as for a car. Take the current ex-showroom price of the same model and variant, apply the depreciation band for its age, and the remainder is the insured declared value.
Two things differ in practice. A two-wheeler depreciates against a much smaller base, so the rupee gap between a fair IDV and a quoted one looks small and is easy to wave through, even though as a proportion of the vehicle it can be the larger error. And accessories matter more: an aftermarket exhaust, crash guards, alloy wheels or a top box are a real share of a bike's value, and none of it is covered unless it is declared and added.
Theft is also the claim a two-wheeler owner is most likely to make, which is precisely the claim IDV caps. A bike insured well under its worth is a bike you will replace out of your own pocket.
For a transport operator running twenty or forty vehicles, the IDV question multiplies. A fleet policy renewed on autopilot for several years usually carries values that have drifted well away from the schedule, in both directions, across different vehicles.
We review fleet schedules line by line before renewal: age against depreciation, IDV against current ex-showroom, and accessories declared or not. It typically finds both under-insured units and over-insured ones, and the net is almost always a saving alongside better cover.
Insured declared value. It is the value at which your vehicle is insured, and the maximum amount payable if the vehicle is stolen or damaged beyond economical repair.
No. IDV is derived from the current ex-showroom price of the same model less a fixed depreciation percentage. Resale value depends on condition, mileage, ownership history and local demand, and can be higher or lower.
Within a band, yes. Insurers usually allow a variation of roughly 15% either side of the calculated figure, and for vehicles over five years old the IDV is agreed rather than tabulated. A higher IDV costs more premium and gives a higher total-loss payout.
No. IDV is based on the ex-showroom price, which excludes registration charges, road tax and insurance cost. Accessories fitted after purchase are valued separately and added to the IDV if declared.
Partly because the vehicle aged into a higher depreciation band, which is expected. But insurers also reduce IDV to quote a lower premium. Compare the renewal IDV against the schedule figure, and if it is materially lower, ask for it to be corrected before you pay.
Find the current ex-showroom price of the same make, model and variant as listed today. Apply the depreciation band for the vehicle's age from the schedule above. Subtract it, and the remainder is the IDV. Add the declared value of any accessories fitted after purchase.
Ex-showroom. The on-road price includes registration, road tax and the insurance premium itself, and none of those form part of the IDV base. Using the on-road figure overstates the IDV and the premium with it.
The one that matches what the vehicle is actually worth. The schedule figure is the right starting point, and the honest test is whether the amount would let you replace the vehicle if it were stolen tomorrow. Anything materially below that is a discount on your own cover.
Usually within a band on either side of the calculated figure, and freely by agreement once the vehicle is over five years old. It costs more premium and raises the total-loss payout. It does not raise what a partial repair claim pays, because that is settled on actual cost.
The method is identical: current ex-showroom price of the same model, less the depreciation band for its age. What differs is that a two-wheeler's accessories are a larger share of its value, so declaring them matters more.
No. A zero depreciation add-on removes the deduction for parts on a repair claim. It has no effect on the IDV, which is the ceiling on a theft or total-loss settlement and is set from the schedule regardless of which add-ons the policy carries.
By agreement between you and the insurer, since the schedule stops at five years. It is usually informed by a condition report or the going used-market rate. There is no table to appeal to, which is why the figure is worth negotiating at renewal rather than accepting on the notice.
Related: Motor insurance · Commercial vehicle insurance · Transport and fleet operators