In total loss, Insured can claim full insured value or IDV of his car. When the vehicle has suffered loss more than 75% of the insurers liability on repairs basis based on IDV of vehicle. In case the vehicle is Total Loss then the insured is paid the full IDV and he has to get the vehicle salvage shifted to the insurers desired premises and has to transfer the ownership rights in favour of the insurers or has to get the registration of the vehicle cancelled from the registration authority ( RTO) as directed by the insurers.
Constructive Total Loss
When the cost of retrieval is very high – 75% or more – but is not a total loss otherwise, it’s termed as Constructive Total Loss, as it is practically not feasible/advisable to go for retrieval. Constructive Total Loss mode is generally adopted when the IDV of the vehicle is less than its market value and liability of insurers on total loss basis is in interest of insurers. In such cases, if IDV less salvage value is lower than the repair liability such mode may be adopted.
In such cases the insured would pay repairs cost less some percentage as agreed by the insured and insurers mutually (which is generally about 30%). In this mode the settlement is done prior to vehicle being repaired and the insured after settlement may get the same repaired in any manner and at any workshop and does not have to prove that that the vehicle is repaired and does not have to submit the bills of repairs. Such mode is opted mostly in case where insured claims as per authorised workshop estimates and after settlement on cash loss basis may get the repairs carried out at some local workshops with used parts and depends on the financial status of the insured.
Cash Loss – Net of Salvage
In this case in event of major loss the settlement is on total loss basis and salvage is also retained by the insured. Thereby the insurers pay the customer the IDV value less salvage value of the vehicle and any other additional deductions as per the policy. Thereafter the insured is free to either repair or dispose of the vehicle and does not have to submit the bills of repairs or transfer the ownership rights to the insurers. In India at present many cases are mostly being settled on cash loss net of salvage basis and mostly by the private insurers.
IDV is the maximum amount that you can claim under a car insurance policy to compensate for any loss arising from theft or accident. IDV is treated as the ‘market value’ throughout the policy period without any further depreciation, for the purpose of Total Loss (TL) or Constructive Total Loss (CTL) claims. So, if you suffer total loss in an accident of your three-year-old car that is worth Rs. 4 lacs at the time of the accident, under no circumstances will you be compensated for more than Rs. 4 lacs.
What will I get in case claim of -?
A- Theft/Total Loss/ Constructive Total Loss– Generally 100% IDV is considered for payment.
B- Theft + Duplicate key is also not available – (100% IDV) – 15% of IDV is deducted. I’m not very sure but even if service book is not available, another 5% (or so) is deducted (we should never keep service book in the car).
C- Accident (other than Total Loss/ Constructive Total Loss)
1- Depreciation – In case of replacement of parts, depreciation is to be borne by Insured.
a. Depreciation of rubber/plastic parts, battery, tyre etc. is charged at the rate of 50%.
b. Depreciation for Metal parts/ electrical parts depends upon the age of car as mentioned in your insurance policy.
2- Compulsory Excess of Rs. 500/- or RS. 1000/- as mentioned in Insured policy
3- Any Extra Job done (i.e. not related to the accident) by the workshop on your instructions, e.g. maintenance-related servicing.
4- Cost of towing in excess of Rs. 1500 will be borne by Insured.
Sometime it’s hard to get the entire amount/IDV – because there are so many riders etc. So always Try & negotiate – ask for detailed calculations before agreeing on anything etc.
Reference – isalvageauction