Can IDV be Increased Next Year for Your Car Insurance Policy?

The IDV or Insured Declared Value of your car plays a vital role in determining the premium you pay for your car insurance policy. It is also crucial in deciding the claim settlement amount in case of total loss or theft of your vehicle.

As your car grows older, its market value decreases due to depreciation. Thus, it is obvious that your car’s IDV will reduce at the time of renewal of your car insurance policy. But can you increase the IDV voluntarily during renewal to enhance your claim amount? Let’s find out in this detailed article.

What is IDV in Car Insurance?

  • IDV stands for Insured Declared Value. It is the maximum sum insured fixed for your car at the commencement of your car insurance policy.

  • It represents the present market value of your car, adjusted for depreciation.

  • The IDV is declared by you, the car owner, at the time of purchasing own damage cover.

  • It impacts the premium you pay for own damage car insurance. The higher the IDV, the higher is the premium.

  • IDV comes into play at the time of Total Loss and theft claims. The claim settlement amount is based on the IDV.

How is IDV Calculated for a Car?

The IDV depends on:

  • Ex-showroom price – For brand new cars, IDV is calculated based on the manufacturer’s listed selling price.

  • Depreciation – The depreciation cost is deducted from the ex-showroom price based on age of the car.

  • Accessories – If extra accessories are added, their value is also considered.

The formula is:

IDV = (Ex-showroom price - Depreciation) + (Accessories value - Depreciation on accessories)

Here is the standard depreciation chart set by IRDAI for cars:

Age of Car Depreciation Percentage
Up to 6 months 5%
6 months – 1 year 15%
1 – 2 years 20%
2 – 3 years 30%
3 – 4 years 40%
Above 4 years 50%

How IDV Impacts Your Car Insurance Policy

  • The IDV directly affects the premium you pay for own damage cover. Higher IDV means higher premium.

  • IDV is crucial in deciding the claim settlement amount in case of total loss or theft of your insured car.

  • You get compensation up to the IDV amount in such cases. Lower IDV means lower claim payout.

Can You Increase the IDV at Renewal?

The IDV generally reduces each year during renewal as your car value depreciates with age. But can you voluntarily increase the IDV while renewing your policy?

  • Yes, you can opt for enhancing the IDV at the time of renewal.

  • Most insurers allow an increase in IDV up to 10% of the previous year’s IDV.

  • This will proportionately increase your own damage premium.

  • You need to pay the revised higher premium to get coverage as per the enhanced IDV.

For example, if your car’s IDV in the previous year was ₹5 lakhs and you increase it by 10% to ₹5.5 lakhs, your premium will also go up correspondingly.

Pros of Increasing IDV:

  • You get higher coverage in case of total loss or theft claims. This safeguards you from losses.

  • If your car’s valuation has genuinely gone up, enhanced IDV protects its present value.

Cons of Raising IDV:

  • Your own damage premium goes up, though claims like these are rare.

  • If there’s no total loss, you pay extra premium unnecessarily.

  • Insurers may cap claim amount to vehicle’s fair market value on the date of loss.

Points to Note Before Enhancing Your Car’s IDV

While you can opt for increasing the IDV at renewal, keep in mind:

  • Don’t over-inflate the IDV beyond your car’s current fair market value.

  • Increase IDV only if you feel existing value is insufficient.

  • Higher IDV only impacts own damage premium, not third party premium.

  • Claims like repairs are still settled on assessment basis, not IDV.

  • Premium hike may not be proportional to IDV raise. Check renewal quote.

  • Insurers discourage abnormal hikes in IDV to prevent fraud.

  • Disclose modifications that enhance your car’s value before IDV boost.

  • Final claim settlement will depend on terms of policy and underwriting guidelines.

Frequently Asked Questions on Enhancing IDV

Q1. Can I increase my car’s IDV at the time of renewal?

Yes, you can opt for increasing your car’s IDV at the time of renewal of its insurance policy. Most insurers allow a hike up to 10% over the previous year’s IDV. This will proportionately raise your own damage premium.

Q2. Does a higher IDV mean I get more claim amount?

In case of total loss or theft, you can get compensation up to the enhanced IDV amount, if you’ve paid the higher premium. But for partial loss claims, settlement is based on assessment of loss and policy terms.

Q3. How much can I increase my car’s IDV when renewing policy?

Most insurers allow you to raise your car’s IDV by up to 10% over the previous year’s IDV when renewing its insurance policy. The increase should be reasonable based on your car’s current market value.

Q4. What documents do I need to increase IDV at renewal?

You may need to submit documents like your car’s updated invoice, valuation certificate from a dealer, details of new accessories added, etc. to justify the increase in IDV proposed by you at the time of renewal.

Q5. Will increasing IDV raise my NCB discount?

No, your NCB or No Claim Bonus discount is based on your claim-free years. It will not get impacted by an increase in your car’s IDV at the time of renewal of insurance policy.

Q6. If IDV is higher, do I pay lower repair bills?

No, your IDV amount has no impact on repair bills. Those are paid as assessed by surveyor subject to terms of your policy. IDV only impacts amount in case of theft/total loss.

Q7. Can I decrease my car’s IDV at renewal?

Yes, you can even opt for decreasing your car’s IDV at renewal, if you feel existing IDV is higher than current market value. This will lower your own damage premium.

Q8. Will raising IDV impact my liability cover?

No, increasing your car’s IDV will only impact the premium for own damage or comprehensive component of your policy. Your third party liability premium does not depend on IDV.

Q9. If my car is modified, can I hike IDV beyond 10%?

You can request for a higher raise in IDV if major modifications have significantly enhanced your car’s value. Submit invoices of modifications to justify the proposed IDV enhancement.

Q10. Can I increase IDV midway through my policy tenure?

No, you can only opt for increasing your car’s IDV at the time of renewal of your insurance policy. Mid-term IDV increase is typically not allowed.


While you can choose to increase your car’s Insured Declared Value at the time of renewal of its insurance policy, be prudent about it. Assess your car’s current fair market value and hike IDV only if existing value seems insufficient. Also, be prepared to pay higher premium. Evaluating pros and cons will help decide whether enhancing IDV makes sense for you.

Over Insured or Under Insured | Insured Declared Value(IDV) in Motor Insurance


Will IDV decrease every year?

Ans: The IDV of a car reduces every year because the market value of the car reduces every year. This happens due to the depreciation in the car’s value with age and usage.

Is it good to have high IDV value?

It is important to know that the premiums to cover yourself are usually 2-3% of the IDV, so you will not see a drastic difference in premiums if you choose to lower your IDV. Thus, keeping your IDV as high as possible will ensure maximum financial security.

What if IDV is low?

A lower IDV of a car implies that its premium will also be lower and a higher IDV of a car will result in a higher premium.

What is the new IDV in insurance?

The IDV full form is Insured Declared Value. In simple terms, IDV can be understood as the market price of a car. It is the highest amount your car insurance provider will give you if your car gets stolen or damaged beyond repair. Therefore, it is the maximum sum insured on your car for a car insurance policy.

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