IDV - Insured Declared Value

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*Above mentioned prices are for Honda City EX 1.5L, 2017 model.
*Above mentioned prices are for Honda City EX 1.5L, 2017 model.

Having a car is necessary to commute these days. Although buying a new vehicle is not rocket science, finding the right car can be a bit tricky at times. Besides, determining which motor insurance in the UAE will suit your needs is a challenging task. According to the UAE law, every vehicle owner should have a valid car insurance before they can start driving it on the roads. If you do not have one, you will be liable to pay fines and receive black points on your driving license. 

How Car Insurance Premium is Calculated?

Several factors determine the cost of motor insurance in the UAE such as financial security, high IDV, proper customer support, and claim benefits. This article will focus on IDV. IDV in the UAE can affect your insurance in a positive as well as in a negative way.

What is IDV (Insured Declared Value)?

Car Insurance IDV stands for Insured Declared Value. It is defined as the highest sum of money finalised by the insurer that is issued at the time of theft or complete loss of the vehicle. In a nutshell, Insured declared value in car insurance is the current price of your car in the UAE after its depreciation due to age, technology and condition. If your car is stolen or completely damaged, the motor insurance amount due is computed through the IDV in the UAE. That is why IDV in Dubai plays an important role in determining the exact car insurance premium.

Things to Keep in Mind Before Submitting Car Insurance Claims (مطالبة تأمين السيارة)

Why is IDV important?

IDV is important because of two essential reasons:

  1. It is the highest amount of money you will get as compensation if your vehicle is stolen or completely damaged beyond repair.
  2. The IDV of your vehicle highly alters the premium of the motor insurance scheme. If the IDV of the vehicle is higher, it brings about a costly premium too, and vice versa.

Many people in the UAE assume that reducing the car insurance IDV in the UAE will reduce their car insurance premium significantly. However, this can be a fatal mistake. Let us say that you reduced car insurance IDV to reduce your premium. The company will offer car insurance at a lower cost. However, if, unfortunately, your car is ever stolen or completely damaged, you will receive less money. You are advised to always calculate the IDV of your vehicle properly before applying for motor insurance.

When is IDV Paid?

Cases that include the IDV of your car are very uncommon. Nonetheless, decide the right IDV when you purchase a vehicle. This will guarantee that your expenses are in check. However, more critically, it will guarantee that if your IDV is needed for the computation of the sum assured, you will get reasonable and acceptable remuneration. Here are a few cases where the IDV of your vehicle is payable: 

The Vehicle is Stolen 

This is perhaps the most widely recognised case where the car’s IDV is payable. When the vehicle is stolen, it is viewed as a complete misfortune, and hence, the insurance agency needs to give the IDV benefit to the customer. This pay will help with counterbalancing the monetary effect of the stolen car. 

Absolute Loss of The Vehicle

The other scenario where the IDV of the vehicle is payable is the point at which the maintenance cost surpasses the market value of the vehicle. Such harm could be an after-effect of a mishap or a man-made disaster. Here, the insurance agency will give the IDV to the owner of the vehicle. This helps the owner of the car to buy a new one.

How is IDV Calculated?

There are two ways by which you can calculate the IDV of your vehicle. First, you can use an online IDV calculator which will ask about a few details of your car and give you an approximate IDV value. Second, if you want to calculate IDV on your own, you can use these two basic formulas to calculate the IDV of your car.

No Added Accessories

IDV = Vehicle’s EX-Showroom Price - Depreciation

If you have to calculate the IDV of your vehicle in UAE and you haven’t added any accessories to your vehicle then the above formula is for you.

Added Accessories

IDV = (Vehicle’s EX-Showroom Price – Depreciation Value) + (The Price of Accessories – Depreciation Value of Accessories)

But if you have added accessories to your vehicle, then the above formula will come in handy.

Depreciation is very important when it comes to calculating the IDV of your vehicle. The price of your vehicle dips every year. This decrease in the value of the car each year is called depreciation.

If your car is less than 6 months old, the depreciation percentage would be 5%. Similarly, if your car is more than 6 months old, the depreciation percentage would be 15%. Once your vehicle is between 1 and 2 years old, the percentage rises to 20%, which signifies that the IDV of your car is 80% of the ex-showroom price of the car. The percentage of depreciation is 30% when your car ages between 2-3 years and so on. Once your vehicle turns 5 years old, the IDV is mutually discussed by the company and the policyholder.

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Factors That Impact The IDV of Your Vehicle:

After you have calculated the depreciation percentage, many other factors affect the IDV of your vehicle and they are listed below:

Car Type

If you are looking to buy a new car, there are a variety of options to choose from in the UAE such as sedans, SUVs, hatchbacks, etc. As we know that SUVs are more valuable as compared to sedans. Similarly, sedans are more valuable than hatchbacks. This is how the type of car impacts the IDV of your vehicle. 


The model of your vehicle also helps in determining the IDV of your car. There are different models and makes of the same kind of car from different companies, which leads to a different IDV for each one of them.


The IDV of your vehicle is also affected because of the place where you booked your car. The ex-showroom cost of your vehicle is different in different cities. 


If you have any added accessories in your car, their cost is also depreciated. Then this depreciated price is added to the total IDV of your vehicle.


This is the most important vital factor when it comes to calculating the IDV of your vehicle. As the vehicle ages, the depreciation cost goes on increasing annually. Therefore, the IDV of your vehicle decreases. If the car is new, the IDV is higher as compared to the same old car.

You should always choose a higher IDV for your car as it comes with various benefits. Even though you will receive an increased sum from your policy, the premium of your vehicle insurance scheme also increases.


IDV in the UAE is an important component of your car insurance. It allows you to receive the amount equivalent to the current value of your car in case of theft or accident. To get the right IDV, it is important to purchase the right car insurance. Since there are numerous options available, buying the right car insurance can be a stressful task. You can relieve your stress by visiting our car insurance webpage where you can compare and buy the best car insurance that suits your needs the best.

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