Constructive Total Loss in Car Insurance

Believe it or not! Save up to 80%* on Car Insurance
Insure your  Brand New Car

Constructive Total Loss in Car Insurance

Have you ever been in an accident that distorted your car but not completely destroyed it? You might wonder if your car insurance will cover repairs or if it is time for a new car. You could face a constructive total loss (CTL) situation in this case.

A Constructive Total Loss occurs when the repair costs for your damaged vehicle reach a certain threshold, typically exceeding 75% of its Insured Declared Value (IDV). This basically means fixing your car is more expensive than it's worth.

In such cases, the insurer might declare your car a CTL and offer you a payout instead of repair coverage. This article will explore what constructive total loss entails, how it works, and what to expect during the claim settlement process. So, let us get started.

What is Constructive Total Loss in Insurance – An Overview

Imagine your car is involved in an accident and sustains significant damage. While the car is not completely destroyed, repairs are extensive.

A CTL full form in insurance is Constructive Total Loss, and this scenario comes into play when fixing your car becomes financially impractical.

Here is how it works:

Insured Declared Value (IDV) represents your car's approximate market value. If the estimated repair cost surpasses a specific percentage (often 75%) of the IDV, it triggers a CTL evaluation.

This signifies that repairs are more expensive than the car's actual worth.

In such situations, your insurance company might declare your car a CTL. This means they will likely pay you the IDV amount as a settlement instead of covering repairs. You will then retain ownership of the damaged vehicle, but you will need to decide whether to sell it for scrap or attempt repairs yourself.

Is the Constructive Total Loss Same as the Total Loss of a Vehicle?

Many people get confused between a vehicle's total loss and its constructive total loss. However, these two are not the same.

A total loss occurs when a vehicle is completely destroyed or damaged beyond repair. It is essentially unusable. In this case, the insurance company takes possession of the wreckage and pays you the car's insured value.

A constructive total loss in vehicle insurance happens when a vehicle is repairable, but the repairs are extremely expensive. The cost to fix the car exceeds a certain percentage (usually 75%) of its market value (IDV). Here, the insurance company gives you the option to receive the IDV as a payout and keep the damaged car.

How Does the Constructive Total Loss in Motor Insurance Claim Fits In?

Four-wheeler insurance claims can be broadly categorised into two types: Own Damage (OD) and Third-Party (TP) claims.

  • Own Damage (OD) Claim: This covers damage to your own vehicle, regardless of who caused the accident. It includes situations where you accidentally hit a stationary object or another vehicle or even damage your car.

  • Third-Party (TP) Claim: This covers any damage or injury caused to a third party (another person or their property) by your vehicle. In India, having at least TP liability coverage is mandatory by law.

Now, where does Constructive Total Loss (CTL) fit in? This can be claimed under both the above-mentioned claim scenarios.

Here is the process:

  • Claim Intimation: You inform Tata AIG about the accident and the damage to your car.

  • Surveyor Inspection: We will send a surveyor to assess the extent of the damage.

  • Repair Estimate: A repair cost estimate is prepared based on the inspection.

  • IDV Consideration: The surveyor compares the repair cost estimate with your car's Insured Declared Value (IDV) (roughly its market value).

This means fixing your car is more expensive than it is worth. In such situations, we might declare your car a CTL. This does not necessarily mean your car is totalled. It simply means repairs are financially impractical.

Also Read: Car Insurance Claim

How IDV is Calculated in Car Insurance?

The Insured Declared Value (IDV) is essentially the maximum amount your insurance company will pay out in case of a total loss or theft of your vehicle. It represents the car's current market value, considering depreciation.

Here is how IDV is calculated in car insurance:


IDV = (Manufacturer's Ex-showroom Price - Depreciation) + (Cost of Approved Accessories - Depreciation on Accessories)

  • Manufacturer's Ex-showroom Price: This refers to the price you pay for the car at the dealership, excluding registration and insurance costs.

  • Depreciation: This represents the reduction in your car's market value due to age and wear and tear. Insurance companies use standard depreciation rates based on the age of your vehicle.

For instance, a new car might have a depreciation rate of 5% in the first year, while a five-year-old car could have a depreciation of around 50%.

  • Cost of Approved Accessories: If you have installed any approved accessories in your car that enhance its value, you can include them in the IDV calculation. However, remember to factor in depreciation on the accessories as well.

Here is the rate of depreciation based on your car’s age:

Age of the Vehicle Depreciation Rate
Below 6 months 5%
Between 1-2 years 20%
Between 2-3 years 30%
Between 3-4 years 40%
Between 4-5 years 50%

Here, as you can see, by the time the car reaches the age of five years, the depreciation rate peaks at 50% and remains constant thereafter. For vehicles older than five years, the total loss of car insurance in India is determined jointly by the insurance provider and the car owner.

Also Read: What is IDV in Car Insurance

Rules Concerning Constructive Total Loss in Car Insurance

There is no particular rule related to Constructive Total Loss in car insurance.

However, Section 55 of the Indian Motor Vehicles Act, 1988, states that if a motor vehicle becomes irreparably damaged or rendered permanently inoperable, the owner must promptly, within fourteen days or at the earliest opportunity, notify the registering authority within the jurisdiction where their residence, place of business or the vehicle is located.

Furthermore, the owner is required to submit the vehicle's certificate of registration to the aforementioned authority.

Tata AIG’s Car Insurance Plans

Car insurance is more than just a legal requirement; it is a financial safeguard for your prized possession. Accidents can happen anytime, and repairs can be expensive. Tata AIG can be your partner in protecting yourself from such unforeseen costs.

Tata AIG offers a variety of car insurance plans to suit your needs and budget. Whether you are looking for comprehensive coverage for your brand-new car or a more basic third-party liability policy, we have options to consider.

Also, our Standalone Own Damage plans specifically cover repairs to your car in case of accidents, theft, or other perils.

You can further enhance your coverage with a choice of add-ons like Zero Dep Insurance, Roadside Assistance, Return-to-Invoice, and so on.

With Tata AIG, you get benefits like extensive cashless network garages for repairs, competitive premiums, and a hassle-free claim settlement process. Also, our online car insurance renewal process is extremely handy, even for the ones who are not internet-savvy.

Explore our website or contact us directly to find a plan that fits your car and budget.

Disclaimer / TnC

Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

Related Articles

What happens when the motor insurance claim is declared CTL?

What happens when the motor insurance claim is declared CTL?


When your motor insurance claim is declared as Constructive Total Loss (CTL), you are required to surrender your vehicle to Tata AIG Insurance. At this point, ownership of the vehicle transfers to the insurance company.

Following the declaration, Tata AIG will offer to pay you back your vehicle's Insured Declared Value (IDV) after deducting any excess (deductibles) as per your policy terms.

What percentage typically triggers a constructive total loss in insurance?


The threshold percentage that triggers a constructive total loss can differ depending on the specifics of your insurance policy. However, it commonly falls in the range of 75% to 80% of the vehicle's insured value.

Does CTL mean the end of the road for the vehicle?


No, a Constructive Total Loss (CTL) does not necessarily signify the vehicle's end of the road. Although it may indicate that the vehicle is not financially viable to repair, it doesn't render it completely worthless. In numerous instances, salvageable parts of the vehicle can be sold, and the generated proceeds can be utilised to mitigate the cost of the claim. Therefore, while CTL marks a significant point in the vehicle's condition, it doesn't signify its total loss or lack of value altogether.