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All About Total Loss in Car Insurance

By Finserv MARKETS - Jul 2,2020
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Total Loss Vehicle Explained

Many people find it difficult to understand motor insurance terms and conditions. While it is advisable to go through the fine print of the car insurance policy carefully before buying the plan, policyholders are unable to get hold of the jargons used by the experts.

Terminologies like zero depreciation, Insured Declared Value (IDV) of the vehicle, No Claim Bonus (NCB), Total Loss, etc. can be confusing for anyone. It makes the process of buying car insurance or simply making a claim on the policy all the more tedious.

In this article, we are discussing one such particular jargon – Total Loss in car insurance. Let us begin.

What is Total Loss?

A car will be declared as a total loss when the cost of its damage repair exceeds the market price of the vehicle. It is important to note that total loss occurs in two scenarios –

  1. In the case of car theft
  2. In the case of a car accident where it is damaged beyond repair

In fact, Section 55 of the Motor Vehicles Act of 1988 specifically mentions that if your vehicle is declared as a total loss, then you will have to get in touch with the RTO (Regional Transport Office) within 14 days of the declaration. You will be requested to submit the registration certificate of the vehicle for cancellation. This prevents your vehicle from being used for illegal purposes in case of theft.

How is Total Loss in Car Insurance Calculated?

Ideally, a vehicle will be declared as a total loss when its damage repair cost exceeds 75% of the Insured Declared Value (IDV). In simple terms, the IDV of the vehicle is its current market price. When the damage repair cost exceeds 100% of the current market value of the vehicle, it is known as Constructive Total Loss.

In such scenarios, the owner of the vehicle will be paid an amount equal to the IDV of the car determined at the time of buying the car insurance plan. The IDV is calculated as follows –

Age of the Vehicle IDV Calculation Rate

(reduction in the cost of the vehicle)

Below six months 5%
Between six months and one year 15%
Between one year and two years 20%
Between two years and three years 30%
Between three years and four years 40%
Between four years and five years 50%
Above five years To be mutually decided between the insurer and the owner of the vehicle (the policyholder)

Consider the following example for a better understanding.

Let us assume that the price of a 2-year old car was INR 5 Lakhs at the time of purchase. If the vehicle meets with an accident and incurs damage that is beyond repair, it will be declared a total loss. In such a situation, the policyholder can claim around INR 3.5 Lakhs with the insurer.

The rate of depreciation is different from various vehicle parts as well. Here, take a look –

Vehicle Parts Rate of depreciation
Paintwork 50%
Nylon, rubber, plastic parts, batteries, airbag, tyres, and tubes 50%
Fibreglass components 30%
Glass components Not Applicable

How to Make a Claim for Total Loss in Car Insurance at Finserv MARKETS

The process to claim on your Bajaj Allianz Car Insurance at Finserv MARKETS remains the same. Just follow the steps below –

  1. Register your claim online at Finserv MARKETS
  2. Duly fill the claim application form
  3. Submit the supporting documents – Police FIR, Vehicle registration certificate, insurance policy copy, driving licence copy, incident report (in case of an accident), etc.
  4. The insurer will assess your claim application
  5. Check the claim status online

To Conclude

Total loss of a vehicle can be quite overwhelming. Hence, it is necessary to safeguard your precious possession with a comprehensive car insurance plan. That way, you will be able to save yourself from the monetary loss.

If you are looking for adequate car insurance, consider the Car Insurance Plans at Finserv MARKETS. You can benefit from features such as cashless claim settlements, hassle-free renewals, 24×7 roadside assistance, and so much more.

You can also buy car insurance on the  Finserv MARKETS App that offers motor insurance at your fingertips. The Finserv MARKETS App is reliable, has a user-friendly interface, and is available on Google Play Store for Android users and Apple App Store for iOS users. You can review your product history through the app in no time and can get in touch with a representative to resolve any doubts.

So, don’t wait. Get your car insured with best in class car insurance plans at Finserv MARKETS, today!

Finserv MARKETS, a subsidiary of Bajaj Finserv, is a one-stop digital marketplace that has been created for consumers on the go. It offers 500+ financial and lifestyle products, all at one place. At Finserv MARKETS, we understand that every individual is different. And that’s why we have invested in creating a proposition – Offers You Value. A value proposition that ensures you get offers which are tailor made for you. We also offer an amazing product range and unique set of online offers across Loans, Insurance, Investment, Payments and an exclusive EMI store. Be it in helping you achieve your financial life goals or offering you the latest gadgets, we strive to offer what you are looking for. From simple and fast loan application processes to seamless and hassle-free claim-settlements, from no cost EMIs to 4 hours product delivery, we work towards fulfilling all your personal and financial needs. What’s more! Now enjoy the same benefits in just one click with our Finserv MARKETS App.

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Bajaj Finserv Direct Limited ("BFDL"), erstwhile Bajaj Financial Holdings Limited is a registered corporate agent of Bajaj Allianz Life Insurance Company Limited and Bajaj Allianz General Insurance Company Limited under the IRDAI composite registration number CA0551 valid till 10-Apr-2021. BFDL also renders services to Bajaj Finance Limited (‘BFL’) and Bajaj Housing Finance Limited (‘BHFL’) (referred hereinafter as ‘Lending Partner’) in sourcing of customers, providing preliminary credit support activities, fulfilment services and post-acquisition customer services related to lending business. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522