A Quick Guide to Total Loss Car Insurance Settlement in India

Car accidents have been on the rise in India over the past few years. Car insurance helps to cover up the loss for a damaged car. If your vehicle is severely damaged, you can raise a car insurance claim under the total loss category. However, often vehicle owners don’t have adequate knowledge regarding the total loss in a car insurance claim. As a result, the insurance company offers them a lesser amount than the original losses incurred. In this post, we discuss what is total loss and how to claim car insurance in case of total loss.

What is total loss car insurance settlement ?

When the repair and recovery cost of the car surpasses 75% of the Insured Declared Value (IDV) of the vehicle, it is considered to be total loss. Also, when the policyholder initiates a claim for serious damages or theft, the motor insurance company may declare the car as a total loss.

In this situation, the insurance provider compensates for the existing IDV of the vehicle minus the amount of mandatory excess. The company suggests that the owners take their vehicles to the recommended premise. The owner also needs to transfer the ownership of the damaged vehicle in the name of the insurance provider. Sometimes, the insurer also asks the owner to cancel the registration of the vehicle at the RTO office.

Constructive Total Loss

A constructive loss is considered when the repair or replacement cost of the car overpowers the present market value of the vehicle. An insurance company cannot agree for retrieval in this scenario; hence, it considers this as a total loss. For a constructive total loss, the car owner receives the current IDV of the car as reimbursement from the vehicle insurance provider.

Insured Declared Value and Total Loss

The Insured Declared Value of any car is calculated by deducting the valid depreciation from the ex-showroom price of the vehicle when it was insured. At the start of each policy period, the IDV of a vehicle is calculated. This value is the amount that an insurance company would pay the owner if the car cannot be repaired. This value diminishes with time.

IDV = The selling price of the vehicle by manufacturers + Total value of accessories â€“ Depreciation according to the age of the vehicle

 

When Does Total Loss Happen in Car Insurance?

  • Theft: If there is a burglary and you cannot locate the car, the insurance company would declare this as a total loss.
  • Damage: if the damage repair cost of the car surpasses more than 75 percent of its cost, it is considered total loss. However, if the damage-retrieve cost is more than 100% of the market value of the car, it is called Constructive Total Loss.

How To Claim Car Insurance?

Let’s take a look at how to claim insurance for car damage in case of total loss:

  • Whenever your car is damaged, intimate the insurance company immediately
  • Provide all information to the adjuster sent by the insurer
  • After evaluating the damage, the adjuster would decide whether the car would be sent for repair or it can be considered as total damage
  • Once the car is declared as total loss, the adjuster evaluates the actual market value of the car
  • The insurance company will reimburse the actual cash value of the totaled car

Documents Required for Car Insurance Claim

For claiming insurance for car damage in case of a total loss, you need to submit the following documents:

  • Copy of RC (Registration Certificate), vehicle insurance policy, driving license, and FIR
  • Duly-filled car insurance claim form
  • Survey report by the adjuster
  • Approximate repair cost of the vehicle

How Many Times can Car Insurance be Claimed in a Year?

There are no limitations to the number of claims that a car owner can raise to the insurance company.

Rate of Depreciation for Various Car Parts

Car Parts     Rate of Depreciation
 
Paintwork     50%
 
Rubber, plastic components, batteries, airbags, nylon, and tyres     50%
 
Fiberglass parts     30%
 
Glass components     No depreciation
 

 

To calculate the IDV, depreciation is estimated according to the age of the vehicle

Age of the vehicle     Rate of depreciation
 
New vehicle     5%
Below 6 months   5%
6 months to 1 year     15%
1 year to 2 years     20%
2 years to 3 years     30%
3 years to 4 years     40%
4 years to 5 years     50%
Above 5 years     The value is decided mutually between the car owner and the insurer

Car Accident Insurance Claim for the Full Value of your Car in Case of Total Loss

In case of a total loss, if you want to receive the entire cost of replacement (not the depreciated value), you need to purchase Return-to-Invoice add-on insurance cover from the insurance company.

By purchasing this add-on facility, you will get the exact invoice value of your car (along with the registration expenses and all taxes). This is applicable only if your car is lost or damaged severely (beyond repair). Here, you will receive the actual amount that you paid initially as car insurance claim charges. Note that you’d need to purchase this add-on cover at the time of policy renewal, not after an accident/theft.

Although several companies offer various car insurance plans, it’s a good idea to check the car insurance claim settlement ratio before opting for a plan. To receive the claim amount from the insurer, you need to make a claim request by submitting all valid documents.

FAQs on #######

A total loss car insurance settlement is a type of insurance claim in which your car is deemed a total loss, meaning the cost of repairs exceeds the actual cash value (ACV) of your car. In this case, your insurance company will offer you a settlement amount based on the ACV of your car, minus any deductible or salvage value.

The ACV of your car is typically determined by an insurance adjuster, who takes into account factors such as the make and model of your car, its age, condition, and mileage. They may also consider factors such as the local market for similar cars and any recent upgrades or repairs you have made.

Certainly, if you believe the settlement amount provided by your insurance company is too low, you can negotiate it. To support your claim, you can submit documentation such as invoices for recent repairs or upgrades, or estimates from dealerships or mechanics. You may also choose to employ an independent appraiser to obtain an estimate of the worth of your vehicle. Keep in mind that your insurance company may also bargain with you, so be prepared to provide proof to back up your claims.

Author Bio

Paybima Team

Paybima is an Indian insurance aggregator on a mission to make insurance simple for people. Paybima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. Paybima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.

Choose from India’s top insurers

Other Motor Insurance Products

Latest Post

See nowSee now

Car theft was a major concern that car owners were worried about for long in India. Even though it still prevails, but the numbers have gone down considerably because of the installation of various anti theft devices over the years. These devices not only enhance your car’s security, but also reduces the insurance premium of your vehicle to a great extent. This is because the installation of anti theft devices in a car guarantees almost no claims of car theft. So, the insurance companies offer good discounts on premiums to car owners having such devices installed in their car. However, you must note that such discount is not available in third-party policies.

If you are considering anti theft devices to install in your car to prevent theft, you can do so by installing an Automobile Research Association of India or ARAI approved anti theft device.

See nowSee now

When you are driving on the Indian roads one of the most crucial obligations for you would be to keep your documents handy with you at all times. This is because you may have to show them at any time when a traffic police officer asks for the same at a signal or elsewhere. As such, it can be rather difficult to remember all these things – to keep them in mind. This is where a Digi locker can be what the doctor ordered for you. The DigiLocker allows you to carry all your papers with you digitally. This is an initiative of the Ministry of Electronics and Information Technology.

See nowSee now

The Insurance Regulatory and Development Authority of India recently introduced the option to buy Long-Term Two-Wheeler Insurance bike policy. You can now either opt for a two-year or three-year bike insurance policy. You can compare insurance policies to make the most of long-term insurance plans.

See nowSee now

Car accidents have been on the rise in India over the past few years. Car insurance helps to cover up the loss for a damaged car. If your vehicle is severely damaged, you can raise a car insurance claim under the total loss category. However, often vehicle owners don’t have adequate knowledge regarding the total loss in a car insurance claim. As a result, the insurance company offers them a lesser amount than the original losses incurred. In this post, we discuss what is total loss and how to claim car insurance in case of total loss.

See nowSee now