What is Total Loss in Car Insurance?

What Is Total Loss?

Total loss in Car Insurance can be declared when a vehicle is lost or damaged to an extent, where it cannot be repaired or the cost of the repair will be higher than the vehicle’s Insured Declared Value (IDV). For example, if the car is damaged by fire or cannot be driven on road, it is considered as Total Loss.
 

The IDV is the highest amount the insurance provider will compensate if the insured car gets stolen or cannot be repaired.

 

The Insured Declared Value (IDV) of vehicles that are over 5 years old or belong to discontinued models (i.e., those no longer produced by the manufacturer) will be determined through a mutual agreement between the insurer and the insured.

 

What is a constructive total loss in Motor Insurance?

Constructive total loss in Motor Insurance occurs when the vehicle is damaged to an extent that the aggregate cost of retrieval and/or repair of the vehicle, subject to terms and conditions, exceeds 75% of the insured’s declared value of the vehicle.
 

The Insured Declared Value for a vehicle is tabulated below and the compensation for the total loss will be based on the below table.
 

As per the Indian Motor Tariff, the Insured Declared Value (IDV) is outlined below.

AGE OF THE VEHICLE	% OF DEPRECIATION FOR FIXING IDV
Not exceeding 6 months	5%
Exceeding 6 months but not exceeding 1 year	15%
Exceeding 1 year but not exceeding 2 years	20%
Exceeding 2 years but not exceeding 3 years	30%
Exceeding 3 years but not exceeding 4 years	40%
Exceeding 4 years but not exceeding 5 years	50%

 

How is Total Loss/Constructive Total Loss calculated?

The insured vehicle will be declared a total loss if it is lost, and a constructive total loss if the repair cost exceeds 75% of the Insured Declared Value (IDV), subject to the terms and conditions of the policy.
 

In such a case, the policyholder will be compensated for the lost or the damaged vehicle according to the Insured Declared Value.  The IDV for the total loss compensation is tabulated above.

 

What Is IDV and how is IDV calculated?

The Insured Declared Value or IDV is the highest amount the insurance provider will compensate for the insured vehicle in case the vehicle is stolen or cannot be repaired. It also plays a major role in determining the premium of Car Insurance.
 

The IDV of the vehicle is calculated based on the make and model of the vehicle, the age of the vehicle and the current market value. The below-listed formula is used to calculate the IDV of the vehicle.
 

IDV = (Manufacturer’s listed price – The Depreciation Value) + (The cost of the vehicle accessories – The Depreciation of these parts).
 

The depreciation value of the insured vehicle will be calculated based on the age of the vehicle. Additionally, the accessories that do not come as a standard fitting for the insured vehicle will be excluded.

 

Which claim category does total loss/constructive total loss fall under?

The total loss or the constructive total loss of the vehicle is categorised under the Own Damage (OD) claim. The Own Damage provides coverage for damages caused by natural or man-made calamities and accidental damages and theft.

 

In case your vehicle is damaged beyond repair or theft of the insured vehicle happens, you can claim it under the Own Damage policy. You will also be able to claim the total loss or constructive loss of the insured vehicle under the Comprehensive Insurance.

 

Shriram Car Insurance provides Comprehensive Insurance, Own Damage and Third-Party Liability Cover. You will get the benefits of Third-Party Liability and Own Damage Coverage if opted for Comprehensive Policy. So it is recommended to choose Comprehensive Car Insurance to get both the benefits of Own Damage and Third-Party Car Insurance.

 

Total loss/constructive total loss claim settlement process

 You can initiate a total loss or constructive loss under the Own Damage policy at Shriram Car Insurance with these simple steps.

 

Step 1: In case of an accident or a theft, the first step is to call and inform Shriram Car Insurance or visit the nearby branch. Additionally, you can initiate the claim online by visiting Shriram Car Insurance website.

 

Step 2: Shriram Car Insurance will guide you through the process and all the required documents to be submitted. The required documents for Constructive Total Loss (CTL) are listed below.  

• Duly filled and signed claim form
• Registration Certificate (RC)
• Driving Licence
• Repair Estimate
• FIR (if applicable)
• Repair Invoice

For total loss in case the vehicle is stolen, the required documents are listed below.

• Claim form
• FIR
• Registration Certificate
• Keys
• Final Report/Un-trace report
• Permit/Fitness/Tax paid status in case of commercial vehicle
• NOC/F-35 if financed
   

Step 3: After the verification process is complete and verified, the claims will be settled.

 

Conclusion

It is important to declare the IDV when purchasing your Car Insurance as it will impact your premium. If you declare the value less, then the compensation will be less in case of claiming for the total loss. So it is important to declare the actual value to the insurance provider.

Shriram Car Insurance provides Car Insurance at an affordable premium and the claim process is also very simple. It is recommended to choose the Comprehensive Car Insurance policy to get the benefit of both the Own Damage and Third-Party Liability Cover.

 

FAQs

1.What is the IDV after 1 year?

The IDV for the vehicle after one year is 20%. The IDV is fixed by the IRDAI, and all the insurance providers follow the same percentage of the depreciation.

 

2. Is a higher IDV better?

A higher IDV will result in a higher premium for the Car Insurance. So it is recommended to declare the actual IDV of the vehicle.

 

3. What is not covered in comprehensive car insurance?

Comprehensive Car Insurance covers both Own Damage and Third-Party Liability. The regular wear and tear or replacement will not be covered by Comprehensive Car Insurance.