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Everything you need to know about the total loss in car insurance

Everything you need to know about the total loss in car insurance

The insurance policy is supposed to protect your financial interests as well as your vehicle in the event of any unexpected accidents. Read on to see what can happen when the situation is extreme.

Accidents are unexpected and there is often irreparable and irreparable damage. In car insurance, a complete loss is declared when it is extensively damaged, so much so that the cost for it will be more than the declared insured value (IDV) mentioned by the car. 

Announcement of total loss

The total loss of car insurance is announced by the insurance company if the claims filed against the policy are more than 75% of the car's IDV. Besides in a situation where an accident caused irreparable damage to the car, a full loss can also be declared if the car is stolen. The down payment in the event of total loss is the actual monetary value of the vehicle. This amount does not take into account the consumption of the value of the vehicle since its purchase.

How is the car ID calculated?

The car's IDV is calculated by deducting consumption from the price of the vehicle's manufacturing, including any spare parts and accessories that are included in the vehicle. The older the car, the higher the consumption rate. In the case of a car over five years of age, IDV is mutually determined between the insurance company and the policyholder. Besides age, other factors affecting the IDV of the model vehicle include the vehicle's engine capacity, current mileage, pre-car market value and more.

What is the total constructive loss?

If the car is damaged so that it is better to buy a new car, a constructive total loss is announced. Usually when the car is damaged it is irreparable, so much so that there is almost no way to get the car back to where it was. In such cases, the cost of repair is also way higher than the current IDV of the car. If this occurs for any vehicle, it must be deregistered within 14 days of the day of the accident. This is stipulated in the Motor Vehicles Act and must be implemented at the Regional Transport Office, where it was originally registered. 

Back to the bill add-on

Returning to the additional invoice is the final addition that will enhance the protection provided by your car insurance policy. It is particularly useful in the case of total loss because it ensures that the policyholder is compensated at the original price of the car as advertised on its invoice instead of IDV, which is usually lower than the invoice price. This is very useful because it provides policyholders with a full refund instead of a reduced price as a result of depreciation and IDV. However, this type of addition is not available with a third-party car insurance policy, which is the mandatory policy regulated by the Government. 


Total loss is the final status to go for an insurance policy. It is quite a binding position where no one wants to be so an insurance provider can apparently provide, hardly for it. However, having an insurance policy still helps and can help you make the right financial decisions even if you feel that your car is beyond any hope.

Read also: 

How to reduce your car premium?

The most important factors that determine your car's premium

Disclaimer: This article is published in the public interest and is intended for public information purposes only. Readers are advised not to rely on the contents of the article as crucial in nature, and further research or expert consultation should be conducted in this regard.

Understanding Return To Invoice In Car Insurance

Return to Invoice (RTI), also known as Invoice Protection Insurance, is an add-on cover. It fills in the difference between the car's insured declared value (IDV) and its invoice value. In the event of a constructive complete loss, you can get a sum equal to the on-road price that you eventually paid to purchase the automobile with this coverage. This Return To Invoice add-on is only valid if your automobile has been severely damaged and is no longer operable. In the case of minor damages, the Return To Invoice add-on is not applicable -

How Does Car Insurance's Return To Invoice Add-On Coverage Work?

You may file a claim against your automobile insurance in a variety of situations, ranging from a broken headlight to car theft. However, if your automobile is irreversibly damaged due to theft, fire, or any other unforeseen catastrophe. In such circumstances, insurance companies pay a sum equal to or up to the car's insured declared value (IDV), which is less than the invoice value, or what you paid for it when you bought it. 

Here comes the return to invoice add-on insurance, which enables you to collect the invoice value of your automobile instead of the IDV as compensation in the event of a total loss.

Return To Invoice Add-On Cover Features

The following are some important details concerning the Return To Invoice add-on cover:

1. This add-on is often available for automobiles that are less than three years old.

2. You may acquire it by paying about 10% extra than your standard comprehensive/standalone own-damage auto insurance policy.

What are the Advantages of Return to Invoice Coverage?

The advantages of acquiring a return to invoice cover are as follows:

1. It's ideal for new automobiles, and it may assist cover the cost of a stolen vehicle or one that's been severely damaged.

2. If you reside in an area where automobile and two-wheeler theft is a typical occurrence, it is a smart idea to get this insurance since it will protect you from these situations.

3. Standard automobile insurance usually provides less reimbursement than the amount you purchased for the vehicle. As a result, if your automobile is stolen or completely wrecked, no insurance will fully compensate you. This is no longer an issue thanks to the RTI cover.

Is the Return To Invoice Cover Valid in Which Cases?

A return to invoice cover is not applicable in the following circumstances:

1. For new autos, the return to invoice cover is designed. As a result, if your automobile is more than 5 years old, you will not be able to purchase this add-on cover.

2. The return to invoice add-on protection cannot be used if the damage to your automobile can be rectified. It is only accessible to persons whose automobile has been stolen or has been damaged beyond repair.

3. The RTI insurance would not be available if you fail to register an FIR after your car is stolen or completely damaged in an accident. This is because the FIR is critical as proof in support of your claim.