What Is Total Loss?
Technically, a vehicle is deemed a total loss when the cost to restore it to its pre-damaged condition exceeds its value. First things first, know that a total loss can be caused by either car theft or a car accident in which the vehicle is damaged beyond repair that it can no longer operate.
What Does Constructive Total Loss Mean In Automobile Insurance?
The insurance company, like Bajaj Allianz car insurance, may, as per its understanding, repair or replace the vehicle or a portion thereof and its accessories or pay the loss or damage amount in cash, and its liability shall not exceed the:
- The total loss/constructive total loss of the vehicle, the Insured’s Declared Value (IDV) of the vehicle (including accessories) as specified, minus the value of the accident. *
- The partial losses, that is, losses other than total loss/constructive total loss of the vehicle – actual and reasonable costs of repair and replacement of parts lost/damaged subject to depreciation as per specified limits.
If your vehicle ever gets in an accident that it sustains severe damage, the insurer may declare it a total loss/constructive loss. When the following conditions are fulfilled, the vehicle is declared a total loss/constructive total loss:
- The damage exceeds the cost of rehabilitation, and
- The insured vehicle shall be considered a total loss/constructive total loss if, subject to the terms & conditions of the policy, car insurance prices, the cost of retrieval or repair exceeds 75% of the insured vehicle’s actual cash value.
The insurer may compensate the loss by paying the IDV, including the damaged vehicle’s salvage value, less applicable deductibles. A deductible is an amount of money needed to pay per claim before the insurer can spend the remainder.
The IDV payable includes the insured vehicle’s wreckage value as determined in as-is condition and at the location where the car was damaged. The insurer may resolve the balance of the IDV after deductibles are deducted under the policy’s terms and conditions.
In case of a total loss, the insured must cancel the vehicle’s Registration Certificate (RC) at the concerned Regional Transport Office (RTO) and submit a cancellation certificate to the insurer for claim processing and settlement.
How Do You Calculate Total Loss?
Only if the cost of rectifying the damages is more than 75% of the IDV is a vehicle considered a Total Loss. When the cost of the restoration exceeds 100% of the property’s current market value, the term “constructive total loss” is applied. This can be calculated on a car insurance calculator.
Which Category Do Total Loss And Constructive Total Loss Claims Fit Under?
The total loss or constructive total loss is classified as Own Damage (OD). The Own Damage plan by Bajaj Allianz car insurance covers damages or losses sustained due to an accident, natural or manmade disasters, fire or detonation, and total loss. In the Comprehensive Motor Insurance Policy, the OD plan and Third-Party Liability Plan are bundled together.
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* Standard T&C Apply
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.