Flooded and Stranded: The Ultimate Guide to Handling Car Damage and Insurance Claims

With torrential rains causing flooding and destruction in Himachal Pradesh, Uttarakhand, and other parts of North India, many individuals are now facing the aftermath, including damage to their belongings. For those who own cars, dealing with car damage and filing insurance claims will be a crucial aspect of recovering from the natural disaster. If you are planning to buy a car, it is essential to familiarize yourself with key terms related to car insurance before committing to an insurance plan.

Flooded and Stranded The Ultimate Guide to Handling Car Damage and Insurance Claims

Insured Declared Value (IDV)

The Insured Declared Value (IDV) is the maximum amount that your insurance company will provide in case of total loss, such as when your car is damaged beyond repair or stolen. It can be compared to the sum assured in health or life insurance policies. The IDV is determined by insurance companies based on the ex-showroom price of your car, with a standard depreciation rate applied over the years. As your car ages, its value depreciates, leading to a decrease in the IDV. This information is specified in your car insurance policy schedule, along with your policy premium.

To calculate the IDV, insurance companies use the depreciation rates specified under the Indian Motor Tariff Act. For instance, a car up to 6 months old is subjected to a 5 percent depreciation rate, while a car between 6 months to 1 year old has a depreciation rate of 15 percent. As the car gets older, the depreciation rate increases, reaching 50 percent for cars between 4 to 5 years old.

Beyond the fifth year, the IDV is estimated through a mutual understanding between the insurer and the insured. In practice, the IDV for this period is typically determined by applying a 10 percent depreciation to last year’s IDV, as stated by Nitin Kumar, Head – Motor Insurance,

Third-Party Cover

A mandatory component of any car insurance policy, the Third-Party Cover provides coverage for damages caused by your car to a third party. In this context, the third party refers to any individual or entity affected by the policyholder’s car. It ensures protection against damages to other vehicles, properties, and any fatalities resulting from a car accident involving you.

Personal Accident Cover for Owner

Another compulsory component of car insurance is the Personal Accident Cover for the car owner. As per the guidelines of the Insurance Regulatory and Development Authority of India (IRDAI), every car owner must have a personal accident cover of Rs 15 lakh. The premium for this cover is fixed at Rs 750 when included in your car insurance policy. If desired, you can opt for a higher cover by paying an additional premium.

It’s worth noting that if you own multiple cars, you don’t need to buy a personal accident cover for each of them. The mandate applies only when purchasing your first car. Alternatively, if you already have a standalone personal accident cover unrelated to any car insurance policy, there’s no need to purchase bundled coverage with your car insurance.


Deductibles are the amounts policyholders must pay before the insurance company covers the remaining expenses. This amount applies to every insurance claim filed. For instance, if you submit a claim for Rs 10,000 and the deductible is Rs 1,000, you will pay Rs 1,000, and the insurance company will cover the remaining Rs 9,000. The purpose of deductibles is to ensure car owners take appropriate care of their vehicles.

There are two types of deductibles – compulsory and voluntary. The compulsory deductible is a fixed amount mandated by IRDAI regulations. For cars with an engine capacity of up to 1,500 cc, the compulsory deductible is Rs 1,000, while for higher capacities, it is Rs 2,000.

Zero Depreciation

Zero Depreciation is an add-on cover that you can opt for in addition to your base car insurance policy. This cover allows you to replace your car parts without accounting for their depreciated value in case of an accident. While it comes with an extra cost, it ensures you are fully compensated for the replacement cost of the car parts.

For instance, if the repair cost for your car after an accident is Rs 10,000, and you have a depreciation rate of 20 percent on car parts and a deductible of Rs 1,000, the insurance company will pay you Rs 7,000. However, if you have a zero depreciation cover, the insurance company will pay you the full Rs 9,000 (Rs 10,000 minus Rs 1,000).

According to Deepak Karani, a Mumbai-based insurance agent, most insurance companies offer the option to include this add-on cover during the first 5 years of your policy, subject to an inspection of the car if not taken earlier. Some insurance companies even allow you to add this cover up to 10 years.


Car insurance terms can be daunting, but understanding them is crucial for making informed decisions while purchasing a policy. Knowing about the Insured Declared Value (IDV), Third-Party Cover, Personal Accident Cover for the owner, Deductibles, and Zero Depreciation can help you choose the right insurance plan to protect your valuable asset.

Leave a Reply

Your email address will not be published. Required fields are marked *