Lowering 'IDV' to Save ₹500 Premium? Stop! Why You Will Regret It When Your Car Is Stolen

Lowering 'IDV' to Save ₹500 Premium? Stop!

Your car insurance is up for renewal. You go to a comparison website, and you see two quotes for the same car:

• Quote A: Premium ₹12,000 (IDV: ₹8 Lakhs)
• Quote B: Premium ₹10,500 (IDV: ₹6 Lakhs)

You think, "Wow, Quote B is cheaper! I'll take that."

You just made a huge mistake. You saved ₹1,500 today, but you voluntarily agreed to lose ₹2 Lakhs if your car gets stolen.

---

What is IDV? (It's Not Just a Number)

IDV (Insured Declared Value) is the maximum amount the insurance company will pay you if your car is stolen or damaged beyond repair (Total Loss).

It is essentially the Current Market Value of your car after deducting depreciation (as per the Indian Motor Tariff Act). It drops by about 10-15% every year.

---

The Trap: Agents Lowering IDV

Insurance agents and websites know you want the "cheapest premium." To make the quote look attractive, they manually lower the IDV value in the system to the minimum allowed limit.

Lower IDV = Lower Premium. It looks like a discount, but it is actually Under-Insurance.

🚗 Scenario: Car Theft or Total Loss

Imagine your car (Real Market Value ₹8 Lakhs) is stolen.

• If you chose Quote A (Correct IDV): You get a settlement of ₹8 Lakhs.
• If you chose Quote B (Low IDV): You get a settlement of ₹6 Lakhs.

Because you wanted to save ₹1,500 on the premium, you lost ₹2 Lakhs instantly. The insurer is legally bound to pay only the IDV printed on your policy, not a rupee more.

---

The "Repair Trap" (Hidden Risk)

If you lower your IDV too much, you face another risk: Constructive Total Loss.

If your car meets with an accident and the repair cost exceeds 75% of your IDV, the insurance company will forcefully write off (scrap) your car instead of repairing it. A higher IDV gives you a better chance of getting your car repaired.

---

How to Choose the Right IDV?

When renewing online:

1. Look at the IDV slider.
2. Set it to the maximum reasonable value closest to the real market price. (Do not inflate it unrealistically, as insurers can dispute that too).
3. Pro Tip: If your car is less than 5 years old, buy the "Return to Invoice" (RTI) Add-on. This ensures that in case of theft, you get the Original Showroom Price, not the depreciated IDV.

---

Penny Wise, Pound Foolish: Secure Your Asset

Insurance is for financial protection, not just a legal formality to avoid traffic fines.

Don't be penny wise and pound foolish. Set the correct IDV so that if the worst happens, you can afford to buy a replacement car, not just a bicycle.

General Advice Warning: The information provided in this article is based on standard Indian Motor Tariff regulations. IDV is calculated based on the manufacturer's listed selling price and the age of the vehicle. Always verify the IDV and Add-on covers (like RTI or Zero Dep) before finalizing your policy payment.