IDV — What it is and why it matters at claim time
IDV (Insured Declared Value) is the maximum amount your insurer will pay if your car is stolen or completely destroyed (total loss). It represents the current market value of your vehicle.
Many people make the mistake of lowering their IDV to get a cheaper premium. Never under-declare your IDV. If your ₹10 lakh car is stolen, but you set the IDV at ₹7 lakh to save ₹2,000 on premium, the insurer will only pay ₹7 lakh.
Standard IDV Depreciation Schedule
- • Up to 6 months: 5% depreciation from showroom price
- • 6 months to 1 year: 15%
- • 1 to 2 years: 20%
- • 2 to 3 years: 30%
- • 3 to 4 years: 40%
- • 4 to 5 years: 50%
No Claim Bonus (NCB) — How it builds
NCB is a discount on your Own Damage (OD) premium (not the third-party portion) for every claim-free year. It belongs to YOU, not the car. If you sell your car, you can transfer the accumulated NCB to your new car.
| Claim-free years | NCB Discount on OD Premium |
|---|---|
| 1 year | 20% |
| 2 years | 25% |
| 3 years | 35% |
| 4 years | 45% |
| 5 straight years | 50% (Maximum) |
The NCB Trap: Even a tiny claim of ₹2,000 for a scratched bumper drops your NCB to 0% the next year. You might lose ₹8,000 in discounts to claim ₹2,000. For minor damages, pay out of pocket if the cost is less than your expected NCB savings.
How depreciation reduces your claim payout
Even with comprehensive insurance, you won't get 100% of the repair bill. Standard policies deduct depreciation on replacement parts:
- Rubber, nylon, plastic parts, batteries: 50% depreciation
- Fibre glass components: 30% depreciation
- Glass parts: Nil depreciation
- Metal parts: Varies by car age (5% to 50%)
Because modern cars have so much plastic (bumpers, headlamp assemblies), standard claims often require you to pay 30-40% of the bill from your pocket. The solution? A Zero Depreciation add-on.
What motor insurance covers and excludes
✅ Covered
- • Accidents & collisions
- • Theft & burglary
- • Fire & explosions
- • Natural disasters (floods, cyclones)
- • Damage during transit
- • Third-party liability
❌ Excluded
- • Driving under alcohol/drugs
- • Driving without valid license
- • Normal wear & tear
- • Mechanical/electrical breakdown
- • Damage outside India
- • Using private car as taxi
IRDAI-fixed third-party premium rates
These rates are fixed by the regulator and change occasionally. Here are the 2026 indicative rates for private cars:
| Engine Capacity (CC) | TP Premium (Approx) |
|---|---|
| Up to 1000cc | ₹2,094 |
| 1000cc to 1500cc | ₹3,416 |
| Above 1500cc | ₹7,897 |
Note: Add 18% GST to the above figures. Do not trust brokers offering "discounts" on TP premiums—it's illegal and usually a scam.
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