When the vehicle is damaged extensively and the cost of its retrieval and repairs is more than the 75 % of IDV, it is treated as total loss claim. In all such claims insurer offers the IDV less the cost of salvage if the damaged vehicle is retained by insured or else the insurer takes possession of salvage and settles the claim for IDV.
But in most of such cases there is the disagreement on following two points, between insurer and insured –
1. Insured’s Declared Value
2. Salvage Value
The National Consumer Disputes Redressal Commission vide its recent order endorsed the views of the State forum to the above two important points –
First, when the surveyor says there was a ‘total loss’ of the subject matter of insurance, the insurance company cannot pull punches but has to cough up the insured’s declared value i.e. the value for which the car has been insured and premium collected accordingly.
Second, the insurer cannot deduct the salvage value even if determined by the surveyor and pay only the balance to the insured.
It is the insurance companies that have the wherewithal to realise the maximum for damaged machines.