Motor insurance is an important aspect of owning a car. It saves you from financial trouble in case of an accident, theft, natural disaster, and third-party liability. But sometimes, an accident can leave your vehicle with extensive damage, where the repair and replacement costs exceed the vehicle’s insured amount.
This is known as constructive total loss. This means that the surveyor appointed by the insurance company has declared that the repair costs exceed 75% of your vehicle’s IDV (Insured Declared Value).
What Happens in Such Circumstances?
If your claim is declared as a constructive total loss, you will have to transfer the ownership of the vehicle to the insurance company / company advised representatives. The company will take possession of your vehicle’s keys and documents. After that, the insurer will pay you the insured declared value, after deducting the depreciation and policy excess (deductibles). The policy will become void after the settlement of the claim
Difference between Constructive Total Loss and Total Loss
Total loss is when your vehicle has been damaged to an extent that it cannot be restored to its pre-accident condition. Total loss can be declared only by the ROP officials a total certificate will be issued once the vehicle is written off by the ROP. However, if your vehicle can be repaired but the cost exceeds the IDV by 75%, the insurance company decides to cancel the vehicle on the basis of constructive total loss.
What is the Insured Declared Value?
Insured Declared Value or IDV is the sum total of the manufacturer’s listing of the selling price of the vehicle, the total cost of accessories, minus the depreciation applicable. The selling price might include the original cost of the vehicle, together with taxes applicable.
Make sure to know about the sum assured offered by the insurance company for motor insurance. A lower sum assured could lead to a complicated situation in the future, leading to the loss of your vehicle.