Can Insurance Company Ask You for Higher Copay, If Repair Cost is too High?

If repair cost is too high, can car insurance company ask you for higher copay?

A motor insurance policy is a mandatory insurance cover which your vehicle is required to have if you plan on using it on Indian roads. The Motor Vehicles Act, 1988 mandates a motor insurance policy on every type of motor vehicle. That is why, like it or not, you are supposed to buy and renew your motor insurance policy every year so that your vehicle has a continuous cover.

There are two types of motor insurance policies. One is the mandatory legal liability cover which protects you financially if your vehicle harms a third party or property and you become liable for the damages. The second is a comprehensive motor insurance policy which covers legal liability as well as any damages faced by you or your vehicle. A comprehensive policy is more effective as it pays for the repair costs when your vehicle suffers any damage.

When it comes to paying claims, the insurance company pays the repairs costs after deducting some amounts from it. One common deduction which is made from your claim is the deduction for compulsory deductible. Compulsory deductible is that portion of the claim which is supposed to be paid out of your pockets every time you make a motor insurance claim.

What happens when the repair costs are too high?: Even when the repair costs are very high, you do not have to worry. Your compulsory deductible is an absolute amount which remains fixed irrespective of the claim amount. Whether the claims are big or small, you would have to bear this fixed amount. If the repair costs are too high, the insurance company has the liability to pay the costs while you pay the fixed amount of deductible.

There is one thing to remember though. If the repair costs exceed 70% or 75% of the Insured Declared Value (IDV), the insurance company declares the claim as Total Constructive Loss. In this case, the IDV is paid after deducting the relevant scrap value.

So, there are two possibilities: If the claim is below 70% or 75% of the IDV of your vehicle, the company would bear the repair costs. Your deductible would remain the same and would not increase. If the claim exceeds 70% or 75% of the IDV of your vehicle, it would be treated as a Total Constructive Loss and the company would pay the IDV after deducting the wreck value of the vehicle.

So, even if your vehicle is badly damaged, don’t fret. You wouldn’t have to pay a higher amount of deductible as your deductible is fixed. However, remember that your claim might be treated as a Total Constructive Loss if the repair costs are above 70% to 75% of the IDV.