How to Calculate IDV

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How To Calculate IDV?

To calculate IDV, start with the manufacturer's current ex-showroom price for your specific vehicle model and variant. Subtract the depreciation percentage prescribed by IRDAI, which ranges from 5% for new vehicles to 50% for those aged four to five years. For vehicles older than five years, the IDV is typically determined through a mutual agreement between the insurer and the policyholder. Properly calculating IDV ensures you receive an appropriate payout in case of total loss or theft.

How to Calculate IDV for Insurance?

Calculating IDV for insurance involves the formula: (Manufacturer’s listed price minus depreciation) plus (Cost of accessories minus their depreciation). The depreciation rate is fixed by the Indian Motor Tariff based on the age of the vehicle. For example, a car between two and three years old usually carries a 30% depreciation rate. This calculation determines the "market value" the insurer will pay for a total loss. Selecting an accurate IDV is vital for balanced premium costs and coverage.

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