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Buying a new car is exciting, but getting a car insurance policy can feel daunting, especially if you’re not familiar with certain jargon and technical terms of the insurance; such an important term is Total Loss in Car Insurance, which comes into use when filing a claim for damages. So, let’s understand what Total Loss in Car Insurance is all about.
A total loss in car insurance arises when the car is damaged to such an extent that the cost of repairing it back to a working condition is more than its actual market value/total Insured Declared Value (IDV).
As per the regulatory norms in India, constructive total loss (CTL) of the vehicle where its repair cost exceeds 75% of its Insured Declared Value (IDV).
The situation of a total loss of car insurance can arise due to the following two reasons:
If the car meets with an accident and is damaged beyond repair such that it cannot be used anymore.
If the car is stolen and is not traceable by the authorities.
NOTE: As per Section 55 of the Motor Vehicles Act, 1988, the owner must declare a total loss and cancellation of its registration if the vehicle is damaged to the extent that it cannot be used. The owner needs to report the same to their registered Regional Transport Office (RTO) within 14 days from the date of the accident.
In case of total loss, the policyholder receives the Insured Declared Value (IDV) of the car after deducting the necessary deductible amount. The following are the standard depreciation rates set by the Indian Motor Tariff Act to calculate the IDV.
Age of the Vehicle |
Depreciation Rate for Calculating IDV |
||||||||||||||
Below 6 months |
5% |
6 months to 1 year |
15% |
6 months to 1 year |
15% |
1 year to 2 years |
20% |
2 years to 3 years |
30% |
3 years to 4 years |
40% |
4 years to 5 years |
50% |
Above 5 years |
Decided mutually between the car owner and insurer only after the car assessment is done. |
For raising a total loss car insurance claim, reach out to your insurer. They will guide you step-by-step through the entire process. You just need to ensure that you have all the required documents available.
If your car has suffered a total loss and you want to cover the total replacement cost, and not just the depreciated value, purchase the Return-to-Invoice add-on insurance cover beforehand.
This add-on cover will allow you to receive up to the equivalent of the maximum price mentioned in the invoice of the insured vehicle of the same or near equivalent make, model, features, specifications. Thus, you will be compensated on the last invoice value of your car.
Also, you will be reimbursed the First-time Registration charges and Road Tax under the new vehicle Insurance Policy of the insured vehicle.
However, remember that you will be eligible to avail of the benefits of Return-to-Invoice cover if you’ve bought it at the time of policy renewal and not after your car’s accident or theft.
When your car is declared a total loss in car insurance, it is horrifying for any policyholder. Knowing about it can easily get you and your vehicle out of the puddle. Make sure you opt for a Return-to-Invoice add-on cover, as being caught in an accident or falling victim to car theft can happen to anybody!
Insurers consider the following factors before determining the total loss insurance value: They inspect the car for mechanical and physical damage to decide whether it can be repaired. Then, a vehicle's ‘Actual Cash Value’ is evaluated based on the car’s depreciation demand in the area.
Insurers consider the following factors before determining the total loss insurance value:
Important factors include: The car’s age Current mileage Make, model, and variant type Physical and mechanical condition Date of registration of the car Cubic capacity of the engine The car’s ex-showroom price Type of car – private, commercial,
Important factors include:
You can ensure maximum reimbursement in case your car is stolen and non-traceable and is declared a total loss by the insurer by purchasing the Return to Invoice add-on beforehand, at the time of buying the car insurance policy.
You can ensure maximum reimbursement in case your car is stolen and non-traceable and is declared a total loss by the insurer by purchasing the Return to Invoice add-on beforehand, at the time of buying the car insurance policy.
In case of a total loss, your insurance company is liable to pay only the IDV. However, if you have purchased the Return to Invoice add-on cover to your insurance policy then the car insurance company is liable to pay a maximum up to the price mentioned in the car invoice.
In case of a total loss, your insurance company is liable to pay only the IDV. However, if you have purchased the Return to Invoice add-on cover to your insurance policy then the car insurance company is liable to pay a maximum up to the price mentioned in the car invoice.
Please try one more time!
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Author: Team Digit
Last updated: 07-04-2025
CIN: L66010PN2016PLC167410, IRDAI Reg. No. 158.
Go Digit General Insurance Limited | Corporate Office Address: Atlantis, 95, 4th B Cross Road, Koramangala Industrial Layout, 5th Block, Bengaluru 560095 | Registered Office Address: 1 to 6 floors, Ananta One (AR One), Pride Hotel Lane, Narveer Tanaji Wadi, Shivaji Nagar, Pune-411005, Maharashtra | Trade logo of Go Digit General Insurance Ltd. displayed above belongs to Go Digit lnfoworks Services Private Limited and is provided and used by Go Digit General Insurance Ltd. under license.
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