INSURED DECLARED VALUE
Unlike third-party cover, the premium in the case of OD cover is decided by the insured declared value (IDV) of the vehicle. IDV is the value that the insurer will pay if your car is completely damaged or stolen. In that sense, IDV is the sum insured and is calculated based on the invoice of your car minus depreciation.
In the first year itself, the value of your car depreciates by 5%. Every year, the insurer will calculate the premium on the IDV. Depreciation also applies to certain body parts such as those made of rubber and plastic. Buy add-on covers to make sure that at the time of claim the policy doesn’t pay the depreciated value but full replacement value.