Looking for Total Loss Car Insurance: Things You Need to Know | PayBima

Total Loss Car Insurance

Road accidents have been on the rise in India in the last few years. Car insurance helps cover the loss of a damaged car. If your car is seriously damaged, you can upgrade your car insurance under the total loss category. However, many times car owners do not have enough information about total loss car insurance. As a result, the insurance company pays them less than the original losses incurred. In this post, we’ll discuss what a total loss is and how to get auto insurance in the event of a total loss.

What Is Total Loss In The Auto Insurance Industry?

When the cost of repairing and restoring the vehicle exceeds 75% of the Insured Declared Value (IDV) of the vehicle, it is considered a total loss. Also, when the owner initiates a claim for serious damage or theft, the car insurance company may declare the car lost.

In such cases, the insurance provider will pay the current IDV of the vehicle minus the maximum permissible amount. The company suggests that owners take their vehicles to recommended locations. The owner must also transfer the ownership of the damaged vehicle in the name of the insurance provider. In some cases, the insurer also asks the owner to cancel the vehicle registration at the RTO office.

Total Loss

A reasonable loss is considered when the cost of repairing or replacing the vehicle exceeds the market value of the vehicle. The insurance company may not accept reimbursement in these cases; therefore, it sees this as a complete loss. In case of a sufficient total loss, the car owner receives the current IDV of the car as a refund from the car insurance provider.

Insured Declared Value and Total Loss

The Guaranteed Insured Value of each vehicle is calculated by subtracting the applicable depreciation from the original value of the vehicle when it was insured. At the beginning of each policy period, the IDV of the vehicle is calculated. This cost is the amount that the insurance company will pay the owner if the car cannot be repaired. This benefit diminishes with time.

IDV = The selling price of the car and the manufacturer + The price of all productsDepreciation according to the age of the car

When Does Total Loss Occur in Car Insurance?

  • Theft: If the car is stolen and you can’t find the car, the insurance company can claim it as a loss.
  • Damage: if the cost of repairing the damage to the car exceeds 75 percent of its value, it is considered a total loss. However, if the cost of removing the damage is more than 100% of the car’s market value, it is called a Constructive Total Loss.

What is the Standard for Total Loss Insurance??

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

  • Whenever your car is damaged, notify the insurance company immediately
  • Give all information to the adjuster assigned by the insurer
  • After assessing the damage, the inspector can decide if the vehicle should be sent for repair or if it can be considered a total loss.
  • When the vehicle is declared a total loss, the adjuster assesses the vehicle’s true market value
  • The insurance company will reimburse the actual cost of the entire vehicle

Documents Required When Applying For Car Insurance

When applying for car damage insurance in the event of a total loss, you must provide the following documents:

  • Copy of RC (Registration Certificate), car insurance, driving license, and FIR
  • A properly filled out car insurance application form
  • A survey report for the editors
  • Approximate cost of repairing the car

How Much Car Insurance Can You Buy in a Year?

There is no limit to the number of claims a car owner can make to an insurance company.

Depreciation Rates for Various Vehicles

Auto Parts The Cost of Decreasing
Art 50%
Rubber, plastic, batteries, airbags, nylon, tires 50%
Fiberglass components 30%
Glass components There is no shortage

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

Age of the car The rate of decline
A new car 5%
Under 6 months 5%
6 months to 1 year 15%
1 year to 2 years 20%
2 to 3 years 30%
3 to 4 years 40%
4 to 5 years 50%
More than 5 years The price is agreed upon between the car owner and the insurer

Read More: Should You Get Small Accident Car Insurance or Not?

Car Accident Insurance for the Full Value of Your Vehicle in the event of a Total Loss

In the event of a total loss, if you want to receive the full replacement value (not the reduced value), you must purchase Return-to-Invoice add-on insurance from the insurance company.

By purchasing this additional space, you will receive the actual invoice value of your vehicle (including registration fees and all taxes). This only applies if your vehicle is lost or severely damaged (beyond repair). Here, you will receive the exact amount that you originally paid as car insurance premium. Note that you need to purchase this additional cover at the time of policy renewal, not after an accident/theft.

Although several companies offer different car insurance plans, it is better to check the car insurance rate before choosing a policy. To receive the amount of money from the insurance, you must make a request by submitting all the required documents.

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