What Happens When Your Car Is Damaged Beyond Repair After An Accident?
If your car can't be repaired or the cost of repairing it is more than its value then it will be assumed as a Total Loss. When this happens, you will be compensated based on the value of your car, allowing you to get back on the road as quickly as possible! Please note that your balance will also be deducted from this amount.
How Was It Determined To Be So?
In case of a severe accident or theft of the car, most people think of making an insurance claim. If the accident is severe and the vehicle is damaged beyond repair you might think to scrap the vehicle. But it should be noted that in case of a severe accident or theft of your car you can claim insurance from your insurance company and the insured declared value of your car will be given to you minus the deductible.
Insured declared value (IDV) is the value of the car agreed by the insurance company and the policyholder for the policy period. The claim amount incurred during the policy period will not exceed the Insured declared value of the car. So in case of total damage to your car or theft, the maximum claim amount that is compensated by the insurance company is the IDV agreed upon and mentioned in the policy copy.
Let us understand the scenarios where the car can be damaged beyond repair after an accident:-
1. Constructive Total Loss:
In the constructive total loss scenario, the car that is damaged due to an accident would be beyond repair i.e. the repair costs would exceed 75% of the IDV value. For instance, if the IDV of the car is mentioned as Rs.5Lacks and the car meets with an accident and the repair value is Rs.4 Lacs, then the insurance company will pay the IDV to the insured.
In some cases, insurance companies may deduct the scrap amount and pay the remaining claim amount to the customer. The onus of selling the scrap amount lies with the insured in this case. In some cases, the insurance company will take the onus of disposing of the scrap and pay the claim amount without any deduction for the scrap amount.
2. Theft/Total Loss:
The other scenario where the vehicle can be beyond repair is the total loss or the theft of the vehicle. When the vehicle is stolen and cannot be traced by the police a no trace certificate will be provided by the local police for insurance purposes. The customer can claim from the insurance company using this certificate. Apart from this certificate, the FIR should also be submitted to the insurance company for claim settlement.
In the total loss scenario, the scrap value of the car cannot be deducted from the claim amount. Hence, the insurance companies will pay the IDV mentioned in the policy copy without deducting the scrap value and any other deductible mentioned in the policy copy will be deducted from the final claim amount.
In both, cases the claims are settled based on the Insured Declared Value mentioned in the policy copy. The higher the insured declared value, the higher would be the claim amount. The customer should take a higher IDV if any insurance company is providing it. How to calculate the IDV of the car? The IDV for a new car is calculated by using the formula IDV = 95%* Ex-showroom price. It means the first year IDV for any car should be at least 95% of the Ex-showroom price mentioned in the invoice copy.
Total loss in car insurance is declared when a vehicle is damaged to such an extent that the cost of repair is higher than the vehicle’s total IDV. Generally, the total loss is declared when the repair cost of the damaged vehicle exceeds 75% of the vehicle’s IDV. Total loss to the vehicle can take place in the following 2 situations:
- Total loss by accident: The car is damaged beyond repair and cannot be used anymore.
- Total loss by theft: The car is stolen and is not traceable by the authorities.
In such situations, the insurance company reimburses the existing vehicle’s IDV deducting the compulsory excess amount of the repairs.
Real Life Scenario:
For instance, let us assume you have purchased a car with an ex-showroom price of Rs.5 Lacs and the total on road price is around Rs.7 Lacs. In the third year, you were offered an IDV of Rs. 4.5 Lacs by an insurance company but you felt the premium was high and went for a lower IDV of Rs.3.5Lacs.
In the same year, your car was stolen and a claim was filed with the insurance company for the same. After verification, the claim was settled by the insurance company and the claim amount was approved to be Rs.3.5 Lacs.
Within 3 years from the date of purchase of the car, you have lost half the value of the car. Now to buy the same model car you need to shell out an extra Rs.3.5 Lacs at least. Had you opted for higher IDV you would have received Rs.1 Lac extra at the time of claim and this amount would have reduced the amount to be incurred from your pocket to purchase a new car.
Factors Affecting Insured Declared Value:
The IDV determines the market value of your vehicle. This is the price that will be settled for you in case of a total loss to your vehicle. Hence, it becomes important to know the various underlying factors that affect the amount of the insured declared value. Such factors are highlighted below:
- Age of the Vehicle
- Current Mileage of the Vehicle
- Make, Model, and Variant Type
- Date of registration of the vehicle
- Cubic capacity of the engine
- The ex-showroom price of the vehicle
- Type of vehicle like private, commercial, or company-owned.
Replacing a Damaged Vehicle after an Accident:
After an accident, your vehicle may be damaged beyond repair. But before you can get it replaced, insurance companies will need to declare it a total loss and then calculate the replacement value.
Vehicles that aren’t worth fixing are known as “totaled.” Insurance companies will determine whether a car is totaled by determining the car’s cash value. If the cost to repair the car is higher than its cash value, insurance companies will usually declare the vehicle a total loss. When that happens, the insurance company will pay you the car’s cash value, minus any deductibles that may apply in your case.
Getting Your Car Fixed After a Crash:
If you need to get your car repaired, the process can get confusing when the other side’s insurance policies are involved. If you’ve been in an accident, take these steps to help get your vehicle back on the road.
- Talk with an insurance agent about the accident, especially if you were injured and have questions about compensation.
- Have your open talk with the insurance companies that may be involved.
- Find an auto repair shop to fix the damage.
- Talk with your insurance agent about a rental car.
Will My Insurance Provider Believe My Car was Totaled?
First and foremost, it’s essential to understand that it’s your insurance company’s job to decide whether your vehicle is a total loss after an accident. Just because you believe your car is beyond repair doesn’t mean your insurance company will automatically agree.
- The car can’t be repaired safely
- The repairs cost more than the car is worth
- The car repairs are higher than the total loss threshold (which varies by state).
Documents required for Total loss insurance claim for a Car:
- Spot Photos or Survey
- Report to Police Authorities / FIR
- Final Repair Estimate
- Policy Original Copy
- RC cancellation Acknowledgement
- Disposal of the salvage
- Hypothecation Cases
- Claim form
- KYC documents of the insured
- Driving Licence: If the vehicle met with an accident while driving then the DL of the Driver on the wheels is required for verification. In the case of a parked car, DL is not required but the proof of parked car is very much required
- In the case of a commercial vehicle, a fitness certificate and permit documents of the vehicle are required.
Tips To Claim Insurance for Extensive Damage:
Claiming car insurance for extensive damage involves a similar procedure to claiming insurance for a minor accident. But, the policyholders must ensure that they have all the documents handy to be produced at the time of the survey.
Make sure you adhere to the car insurance claiming process as listed in the terms and conditions of your policy. The following are a few tips that you can consider while claiming car insurance for damage beyond repair:-
- Reporting To the Police
- Collect Evidence
- Informing Your Insurer
- Fill out the Claim Form
- Parking Charges
- Be Honest About the Incident
- Follow Up With the Insurance Provider.
How to Claim Car Insurance in India?
One needs to register a car insurance claim with the insurance company immediately after the accident takes place. The insurance company verifies the documents, and upon finding the claim to be genuine, the insurer pays for the damages caused to the vehicle. Here are the details about the car insurance claim process if damage occurs to own vehicle.
- Inform the Insurance Provider
- Lodge an FIR:
- Collect Proof
Filing a Car Insurance Claim:
- You should thoroughly check the car to determine damages done to the vehicle. You should also check yourself or those traveling in the car for any injuries caused
- You should register for the claim within the stipulated time as given by your insurance provider. In a few cases, it is 24 hours from the damage caused
- Keep a note of the model, number, and color of the vehicle that was involved in the accident
- Keep the contact details of all the witnesses. It will be necessary to identify the person responsible for the accident
- Assess the damage done to the vehicle and make an immediate call to the insurer
- Take your car to the nearest network garage and get the bills settled at the network garages themselves.
Documents Required for Car Insurance Cover:
- A copy of the insurance policy
- A copy of the FIR report submitted to the police
- Duly filled and signed claim form
- A copy of the car registration certificate
- A copy of the valid driving license
- Details about the repair estimates
- In case of physical injuries, an original copy of the medical receipts
- Original receipt copy of any other expenses incurred.
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