2841
3 min read
Updated on Aug 03, 2023
A total loss arises when your vehicle is so severely damaged that the claim payable by the insurance company for the cost of repairs is more than 75% of the IDV of the vehicle.
For a claim to qualify as a total loss, some factors need to be considered. These factors are as follows :
The insurer’s liability towards the claim should be more than 75% of the IDV of the vehicle. The insurer’s liability would be computed as follows: Cost of repairs – (depreciation of the parts + compulsory deductible portion + any voluntary excess + cost of repairs not associated with the accident + any other uncovered expenses) This amount represents the claim which the insurance company is supposed to pay. When this claim exceeds 75% of the cost of the IDV, the claim is treated as total loss.
The IDV (Insured Declared Value) of the vehicle in the policy year when the claim is made would be considered.
After a claim for total loss is paid, the car insurance policy is terminated.
If the insurance company considers a claim to be a total loss, the amount payable would be the IDV less the wreck value of the car. The wreck value or the salvage value of the car is the expected amount which can be fetched by selling off the damaged car as scrap.
Even though the insurance company considers your claim as a total loss and pays off the IDV less the wreck value, you might get your car repaired. You would get the claim from the insurance company after which you can treat your car as per your discretion. You can sell the car as scrap and buy a new car. Alternatively, you can also get your car repaired. However, if you get the car repaired, you would have to obtain a certificate of roadworthiness from the RTO for your repaired car. Moreover, when you buy a fresh motor insurance policy in future for your repaired car, you would have to disclose to the insurance company that your earlier insurance policy had paid a claim for total loss for your car. These two steps are necessary if you continue using your car on which a claim for total loss has been paid.
A claim for total loss is declared by the insurance company only if its liability towards the car’s repairs is more than 75% of the Insured Declared Value of the car. In case of a total loss, (IDV – the wreck value) is paid to the policyholder.
Let us assume a Person X –
X received Rs.3 lakhs because his IDV in the year of loss was Rs.3.75 lakhs and the scrap value was estimated to be Rs.75, 000. When Mohan understood the meaning of total loss, he decided to buy a new car. He received the claim, sold off the old car as scrap and bought himself a new car. Now you also know what are total loss and the claim you get in case of such loss. So, if God forbid, your car insurance claim is treated as a total loss, understand the concept and know what to expect in claim settlement.
Choose wisely!
Found this post informational? Browse PayBima Blogs to read interesting posts related to Health Insurance, Car Insurance, Bike Insurance, Term Life Insurance and Investment section. You can visit PayBima to Buy Insurance Online.
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.
With digitization taking over everything, the process of buying new four-wheeler insurance in India has become a convenient and effortless task. Online buying allows the.
Depreciation is the silent financial predator that eats up the value of your car over a period of time. It not only deteriorates the vehicle.
We know that third-party car insurance is mandatory, and without this cover, you cannot drive vehicles in India. But, even with a third-party cover can.
If you are a four-wheeler owner, buying car insurance is not just a legal obligation but also necessary for your peace of mind. In the.
Everything you need to know about car inspection as part of the insurance claim process. A car is one of your most valuable assets and.
Pollution is a huge threat that has been contributing severely to the deteriorating health of people in India. A major contributor of the increased air.
Airbags are among the significant safety innovations of the recent time as they provide vital cushioning to people sitting in a vehicle during a crash..
For keeping the environment clean and pollution free, people have now started using Electric Vehicles in India widely. Let us understand in this post how.
A car insurance policy number is a basic requirement during accidents, mishaps or at regular traffic police checking. Let us understand how to get an.
Accidents and uncertainties are part of life that comes unexpectedly without any prior information. Hence, it is very important to have a first aid kit.
Speak to our advisor
Mahindra Insurance Brokers Limited (A Mahindra Group Company) - Unit-202, A-Wing, 2nd Floor, Amiti Building, Agastya Corporate Park, Kamani Junction, LBS Marg, Kurla West, Mumbai - 400070. Tel: +91 22 66423800
Licenced by IRDAI License No. 261; License Validity : 17-05-2025; Category : Composite Broker; CIN : U65990MH1987PLCO42609 Member of Insurance Brokers Association of India (IBAI).
Insurance is the subject matter of solicitation.
For a seamless experience, use the latest version of Chrome/Firefox/Internet Explorer.
Copyright © 2023 Mahindra Insurance Brokers. All Right Reserved.
Verify your number to activate your best premium offer
Please enter the OTP sent to XXXXXX 4099 to continue