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Understanding the concept of total loss is crucial to grasp how car insurance companies decide if a vehicle is deemed beyond repair or worth repairing. It plays a pivotal role in determining the outcome of insurance claims and the financial implications for policyholders.
This detailed guide will offer a clear understanding of how insurance companies determine if a car is to be declared a total loss. We will also find out how to use an online IDV calculator. While the IDV calculation doesn’t directly estimate repair costs, knowing it can indirectly help assess whether repair costs might exceed the car’s value, which is a factor in determining if the car is deemed a total loss by insurance companies.
Exploring types of car insurance policies
Understanding the different types of car insurance policies is essential because it provides insight into the extent of coverage and benefits offered by each policy. An insurance policy for car can be classified into 3 main types:
- Third-party plans: A third-party plan covers damages caused to third-party vehicles, property, or individuals, making it advantageous when dealing with claims from an accident involving another party.
- Own-damage plans: An own-damage plan is your ally when your vehicle succumbs to damages. It covers repair and replacement costs solely for your vehicle.
- Comprehensive plans: On the other hand, a comprehensive policy is like having an all-in-one travel kit—it combines coverage for third-party liabilities and own damages. This plan provides a safety net for various situations, encompassing both ends of the car insurance spectrum.
What is a total loss?
The term ‘total loss’ is a common phrase in insurance, especially when dealing with automobiles. It’s a technical term that might initially sound quite grim, but it’s essentially an insurance jargon that relates directly to the financial aspect of your car’s value. Simply put, a ‘total loss’ is declared when your car suffers extensive damage, and the repair cost exceeds the vehicle’s actual worth.
Let us understand this with an example.
Suppose you own a car valued at INR 3.5 Lakhs. Now, your car undergoes severe damage due to an unfortunate accident or perhaps an unforeseen calamity. Using an IDV calculator, the insurer estimates the repair costs for your vehicle and finds them to balloon up to INR 5 Lakhs. In such a case, your vehicle would be declared a total loss since the repair costs supersede the market value of your car.
This concept becomes crucial when considering an insurance policy for car owners in India, as understanding what ‘total loss’ means can influence your decision-making while purchasing or renewing your auto insurance.
Filing a claim for total loss
The ensuing process can feel overwhelming if your car undergoes severe damage and is declared a total loss. Here are the steps for filing a claim for total loss:
- Inform your insurance company immediately about the incident through their 24×7 helpline or visit the website’s claims section.
- Submit the claim form online with the necessary details about your car and policy.
- The insurance company will dispatch a surveyor to assess the damages.
- Your vehicle will be taken to a network garage for further evaluation.
- If the cost of repairs exceeds 75% of your car’s IDV as per an IDV calculator, it may be declared a total loss.
- The insurance company will then reimburse you based on the current market value of your vehicle under your car insurance policy.
Things to keep in mind
When filing a total loss claim, time is of the essence.
- Ensure to file your claim within 14 days of the incident.
- Consider additional coverages, such as the return-to-invoice add-on during your insurance policy for car purchases. This add-on lets you claim the on-road price of your car instead of the depreciated value.
- To calculate the depreciated value correctly, use an IDV calculator. Here is how to use it:
- Enter your car’s details such as make, model, year of manufacture, and current market value.
- The calculator will compute the Insurance Declared Value (IDV) based on predefined depreciation rates.
- Review the calculated IDV to ensure it accurately reflects your car’s current worth for insurance purposes.
Conclusion
Understanding how insurance companies decide if a car is a total loss is crucial for car owners. This knowledge empowers them to make informed choices about coverage options, claims processes, and potential disputes with insurance companies. It ultimately ensures that car owners receive fair compensation for their losses.
Remember, insurance isn’t just another checkbox to tick off; it’s about safeguarding your precious vehicle and peace of mind. Discover affordable car insurance directly from ACKO. With our streamlined digital setup and elimination of intermediary commissions, we keep operational costs low, ensuring competitive prices tailored for you.
Disclaimer: Vehicle insurance is a mandatory requirement as per The Motor Vehicles Act, 1988. Non-compliance can lead to monetary penalties and legal issues. Thus, make sure to buy vehicle insurance and keep the policy active by renewing it before its expiry date. You can buy/renew vehicle insurance easily, quickly, and conveniently via the ACKO website/app for a hassle-free insurance experience.
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