What Is Total Loss In Car Insurance?

by SMCIB on Tuesday, 21 May 2024

What Is Total Loss In Car Insurance?

Car accidents can be immensely stressful and overwhelming, especially when they result in severe damage to your beloved vehicle or, worse, theft. In these challenging moments, understanding insurance claims, particularly for total loss, becomes crucial. This is when you file something called a “total loss claim”.

What is a total loss claim? What steps should you take when dealing with a total loss claim? This article is all about that - empowering you with the knowledge to confidently handle this intricate process and get back on the road with peace of mind.

First, What Are The Types Of Claims?

Basically, the claims can be of two types -

  • Accidental Claims: These occur when your vehicle is accidentally damaged, and you need to file a claim with the insurance company to have it repaired at an authorised garage.
  • Total Loss Claims: These happen when your vehicle is either severely damaged in an accident beyond repair or if it's stolen.

What Is Total Loss?

When we talk about a total loss, it means your vehicle is either too damaged to fix or it's been stolen. The insurance company decides this when the cost to repair your vehicle after an accident exceeds a certain percentage of its value. Typically, if the repair bill goes beyond 75% of your car's IDV, it's considered a total loss.

Insurance companies look at several factors before classifying a vehicle as a total loss -

  • Depreciation value
  • Year of production
  • Brand and model
  • Wear and tear
  • Market demand for the vehicle

How Is Total Loss Calculated?

A vehicle is considered a total loss when the cost of repairing damages surpasses 75% of its Insured Declared Value (IDV), which is an estimate of its market worth. If the repair costs go over 100% of its current market value, it's termed as a constructive total loss.

In either scenario, the car owner receives an amount equal to the IDV. This value is determined based on -

Vehicle’s Age

Depreciation (Reduction In Value) Rate For Determining IDV

Below 6 months


6 months to 1 year


1 year to 2 years


2 years to 3 years


3 years to 4 years


4 years to 5 years


Above 5 years

Mutually decided between vehicle owner and insurer

What To Do When There Is A Total Loss Claim?

You need to follow the same process for accidental claims as you would for any other claim –

  1. Filing An FIR
    If it's a major accident, start by getting an FIR (First Information Report) from the relevant authorities; this is crucial and needs to be submitted to the insurance company.
  2. Notification
    Next, inform your insurer about the accident, providing them with all the necessary details, including information about the individuals involved.

    Here are the documents required to file a claim -
  • Driving licence
  • Duly filled car insurance claim form
  • Insurance policy certificate copy
  • FIR
  • Registration Certificate of your vehicle
  • Cancelled cheque 
  • Pictures highlighting the vehicle damage
  • Original repair bills
  • Original payment receipts
  • Original purchase invoice

Additionally, take plenty of photographs of the incident and your vehicle. These photos will serve as essential documentation for your claim.

Providing all the details related to the incident will help ensure a smooth and prompt settlement of your claim with the insurance company.

  1. Surveyor Inspection Will Take Place
    If permitted by the insurance company, you can move your vehicle to a garage from the accident spot. Otherwise, you'll need to leave the vehicle untouched at the accident site until the surveyor arrives.
    Once the surveyor inspects the vehicle, they'll assess the damage. If the damage is beyond repair, the surveyor will declare it a total loss.
  2. Settlement Process
    Upon receiving the surveyor's report, the insurance company will use it to process and settle the claim accordingly.

Wrapping Up!

Dealing with total loss claims in car insurance can be daunting, but with the right knowledge and steps in place, you can navigate through this process smoothly. Remember, total loss occurs when your vehicle is either too damaged to repair or has been stolen, and it's crucial to understand how insurers calculate it based on factors like IDV and depreciation. In case of a total loss claim, promptly inform your insurer, gather all necessary documentation, and follow the required procedures to ensure a prompt settlement. By being proactive and well-informed, you can ensure peace of mind as you hit the road again.


If your vehicle is deemed beyond repair, the insurer will categorise it as a 'total loss/constructive total loss.' In terms of your claim, you'll be compensated with the Insured Declared Value (IDV), which encompasses the wreck value of the damaged vehicle after deductibles as per policy terms, including any voluntary deductibles.

The insurance contract specifies that the insurer will cover liabilities up to the IDV mentioned in the policy, which includes the wreck value of the damaged vehicle after deducting compulsory and voluntary deductibles (if chosen). However, exceptions apply if you have the return to invoice add-on cover(applicable only to comprehensive car policies)

If your vehicle is declared a total loss, the insurer will provide compensation to you based on the current Insured Declared Value(IDV) minus the compulsory deductible amount.

To claim the total loss amount for your car, contact your insurer promptly after the damage occurs. Give them all the required information, and they will compensate you with the current Insured Declared Value(IDV) minus the deductible amount for a total loss.

For certain types of claims, you might not need to file a First Information Report (FIR) when filing a car insurance claim. However, in cases involving serious injury or death of a third party due to a road accident, filing an FIR is mandatory to process the claim. It's important to note that for minor accidents causing minimal damage, an FIR may not be required.

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