what happens if you have insurance and your car is totally damaged?
Understanding car insurance can be complex if you are unaware of the various terms related to it. One such term is ‘total loss’. A car accident can cause complete destruction of the vehicle, leading to higher repair costs that even exceed the vehicle’s existing market value. In such cases, the insurance company declares the vehicle as total loss. Read on to know all about total loss of car and how you can register a claim for the same.
What is total loss of a car?
As mentioned above, total loss of a car is declared when the cost of vehicle repair is more than 75% of its insured declared value. Car can be declared in the state of total loss in case of theft of the car or an accident that makes it unusable. The vehicle is also declared in the state of constructive total loss when the cost of repair or replacement exceeds its actual market value.
How do insurance companies determine the total loss value of a car?
Understanding car insurance can be complex if you are unaware of the various terms related to it. Insurance companies determine the total loss value of a car after you raise a claim. On making the claim, the insurance company will send a surveyor to check and estimate the damages caused to the car. On successful checks, a rough estimate will be prepared based on the analysis done by the surveyor. In case the estimates shared by the surveyor exceed the current market value of the car, total loss will be declared.
How is total loss calculated?
A vehicle is declared in the state of total loss only when its repair cost is more than 75% of the insured declared value.
Insured declared value is defined as the total market value of the car. When the cost of repair exceeds 100% of the insured declared value, it is defined as constructive total loss. In both the above cases, the vehicle owner is paid an amount equal to the insured declared value of the car.
IDV is calculated based on the following
| Age of the Vehicle | Depreciation (reduction in cost) Rate for Calculating IDV |
|---|---|
| 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 | Mutually decided between vehicle owner and insurer |
For instance, if the cost of your 3-year old vehicle at the time of purchase was 7 lakh rupees, hence, in case of total loss, you can claim around Rs. 4.28 lakhs.
What is the total loss car insurance claims process?
1. Follow the below steps to register claim for total loss of vehicle
2. Inform your insurance company as soon as your car gets damaged
3. Share all the required information and documents
4. File an FIR if required
5. Insurance company will appoint a surveyor to check on the damages
6. The surveyor will decide whether the vehicle can be repaired or if it is eligible to be claimed under total loss
7. Once the surveyor declares the vehicle as total loss, the total cash value of the vehicle will also be conveyed to you
8. The insurance company will then pay you the cash value
Documents required for filing total loss car insurance claim
The below documents are required to file total loss car insurance claim
• Copy of vehicle registration certificate
• Surveyor’s report
• Vehicle insurance policy copy
• Estimated repair cost of the vehicle
• Duly signed car insurance claim form
• Copy of driving license
• FIR copy or registered panchnama
How is the actual value of the car determined in case of total loss?
• Depreciation value of the car
• Car make and model
• Manufacturing year of the car
• Car inspection report
• Mileage of the car
• Condition of the car
• Current demand and supply of car make and model
Conclusion
Total loss is a condition which requires insurance coverage which is why it is necessary to insure the car. Not insuring the car with comprehensive car policy can land the vehicle owner in financial trouble.
Also Read: What is Collision Damage Waiver and How Does it Work?
