Things to Know About Total Loss Car Insurance Claim Process

Imagine you have raised a claim after your car gets damaged in an accident. If the vehicle is severely damaged, there is a possibility of your insurer declaring it as a total loss. Are you unaware of what total loss in car insurance means? Don’t worry! We will tell you everything you need to know about the total loss of a car and the process to raise a claim.

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What is the Total Loss of a Car?

When the estimated cost of repairing a damaged car is more than 75 per cent of its Insured Declared Value (IDV), then it is known as a total loss of the car. A car is declared as a total loss by the motor insurance company after a claim is raised by the policyholder for severe damages or theft. Moreover, if the estimated cost of repairing or replacing the insured car exceeds its actual market value, it is known as a constructive total loss. When a car is declared as a total loss by the motor insurance provider, it is called a totaled car.

The total loss of a car can occur in two situations, which are as follows:

  1. Theft: When your car has been stolen and can't be recovered.
  2. Severe Damages: When your car gets damaged to such a degree that you will have to almost spend the cost of the car to get it repaired.

In both situations, it makes no sense to repair the car due to its high repair cost. Hence, damaged cars are declared as a total loss in these situations.

How Do Insurance Companies Determine the Total Loss Value of a Car?

The total loss value of a car is estimated by a motor insurance company after you raise a claim. Once the claim has been made, your motor insurance company will send an adjuster to estimate the damages sustained by your car. The adjuster will carefully analyse various parts of the damaged car and roughly estimate the cost of repairing the car. If the repairing cost of the damaged car exceeds its current market value, the adjuster will declare it as a total loss.

You May Also Read: Total Loss in Car Insurance

What is the Total Loss Car Insurance Claim Process?

The process to raise a total loss car insurance claim is given below:

  • Inform your motor insurer as soon as your car gets damaged
  • Provide all the requested information to the adjuster sent by the insurance company
  • The adjuster will assess the damages to the car and will either approve it for repair or declare it as a total loss.
  • Once the insured car has been declared a total loss, the adjuster will determine the actual cash value of the totalled car.
  • The insurer will pay the actual cash value of the totalled car.

Total Loss Car Claim Process

Documents Required to Raise a Total Loss Car Insurance Claim

At the time of filing a total loss car insurance claim, your insurer will ask for the following documents:

  • Copy of the car’s registration certificate (RC)
  • Surveyor’s report to discover the cause of the loss
  • Copy of your vehicle insurance policy
  • Car insurance claim form duly filled and signed
  • Estimated vehicle repair cost
  • Copy of driving license (DL)
  • Copy of the FIR or registered panchnama 

How to Determine the Actual Cash Value of a Totalled Car?

When a four-wheeler is declared as a total loss, the insurance company determines the actual cash value of the car. The actual cash value refers to the monetary value of a totalled car. There are several factors that determine the actual cash value of a car. Take a look at them below:

  • Car inspection reports stating the damages to the car
  • Depreciation value of the car
  • Make and model of the car
  • Manufacturing year of the car
  • Mileage of the car
  • Condition of the car
  • Current demand and supply of the make & model of the car

Total Loss Car Insurance Settlement in India

In India, car insurance companies settle a total loss claim by ascertaining the depreciation on the insured car. The rate of depreciation for different car parts varies from each other. Here is the list of car parts with their rate of depreciation-

Car Parts

Rate of Depreciation

For all nylon,/tyres and tubes,/ rubber & plastic parts,/ and batteries

50%

Fiberglass components

30%

Glass components

Nil

Paint Work

50%

You May Also Read: Car Depreciation Calculator

Rate of depreciation based on the age of the car-

Age of the Vehicle

Rate of Depreciation

New vehicle

5%

Below 6 months

5%

6m-1y

15%

1y-2y

20%

2y-3y

30%

3y-4y

40%

4y-5y

50%

Above 5 years (for obsolete models)

Mutually decided between the insurer and the car owner

Once a car crosses the age of 5 years, the IDV is ascertained after an assessment of the car. The authorised car dealer, used car dealer or surveyor conducts the vehicle’s assessment.

Conclusion

A car is considered a total loss when the cost of repairing or replacing it exceeds 75% of its IDV. It can happen due to the theft or accident of the car. However, for a total loss car insurance settlement in India, you need to raise a claim and ensure that you submit all the required documents to the insurance company.

Written By: PolicyBazaar - Updated: 30 November 2021
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