Total Loss in Car Insurance

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Total Loss in Car Insurance

Car insurance plays a pivotal role in financially shielding you from unplanned expenses resulting from road accidents, personal injury from said accidents and third-party liabilities. It is considered a practical investment for all car owners.

But what happens when your car meets with an unfortunate accident that leads to a total loss of the vehicle? Does your insurer compensate you for the total loss? Read on to learn what is a total loss in car insurance and how it is compensated by insurers.

What is a Total Loss in Car Insurance?

Total Loss of the Car Due to an Accident: Consider the scenario where your car meets with an unexpected accident and gets completely damaged.

If the damage is beyond recovery and your car is no longer useable, you can file a total loss car insurance claim.

Total Loss of Car Due to Theft: If your car gets stolen and is not traceable, you can file a total loss insurance claim.

In both scenarios, the insurer reimburses you the IDV value of your car after deducting the necessary repair costs based on the defined terms and conditions per your car insurance policy.

Further Reading:

Definition of a Totalled Car in Insurance: Most insurers consider a car "totalled" if its total repair cost exceeds its actual value/price. They also refer to this as a total loss of the vehicle in insurance.

What is IDV?

IDV refers to the Insured Declared Value of your car. It is the sum assured and the maximum amount you can receive from the insurance provider in theft or total loss of the car. It is determined by the prevailing market value of the car.

It is calculated based on your car's age. As your car gets older, its market value will decrease, which further reduces the IDV. So, the total sum assured IDV amount you can receive decreases every year. This can be seen when you renew your car insurance every year.

How is IDV Calculated?

IDV is determined by considering the total value of all the accessories of the car, its current selling price listed by the manufacturer and the total depreciation value based on its age.

When your car gets older, it depreciates in value based on the extent of usage, wear and tear. So, while calculating the IDV, the rate of depreciation is considered while determining the sum assured. Shown below is the rate of applicable depreciation against the vehicle's age:

Age of the Vehicle Rate of Depreciation(%)
New Vehicle  0.05
Not Exceeding Six Months 0.05
Between 6 months to 1 Year 0.15
Between 1 To 2 Years 0.2
Between 2 To 3 Years 0.3
Between 3 To 4 Years 0.4
Between 4 To 5 Years 0.5
Above 5 Years Mutually decided by the insurer and car owner

Other Factors Affecting IDV

Make, Model and Variant of the Car: An expensive car with advanced features will have a higher IDV than a basic car model.

Geographic Location: Cars registered in a metropolitan city will have an IDV different from cars present in small towns and rural areas.

Vehicle Type: Whether the car is a private, commercial or company-owned vehicle will affect its IDV value.

How to Avoid Lower Claim Amounts in Total Loss Car Insurance Settlement in India?

Since the IDV value decreases each year, it could mean receiving a lower sum assured payout when filing a total loss car insurance claim.

If you own an expensive or luxury car, this could mean a significantly lower payout compared to the actual price you bought your car for.

To avoid this, we recommended getting a Return to Invoice add-on when buying comprehensive car insurance from Tata AIG. This add-on will reimburse you the total invoice amount of your vehicle for a total loss in insurance.

The total loss settlement process is also not all that different from a regular claims process. You simply need to contact your insurer and they will send an inspector to assess the damage to verify if it exceeds 75% of the IDV.

Also Read: Bike Accidents In India And Insurance Claims

Benefits of Return To Invoice Add-On When Dealing with Total Loss of the Vehicle

When you file an insurance claim for the total loss of your car due to theft or accident, this add-on will cover the difference amount due to the depreciation rate between the purchase value and the compensation offered by the insurer.

If there is a brand new car with the same make and model, insurers will compensate the difference between the amount claimed and the car's new price.

The return to invoice option will also pay for the road tax and registration cost that you have paid for the car.

At Tata AIG, we consider the impact of financial loss on your family and ensure swift total loss insurance claim settlements. As a result, we have achieved a 98% claim settlement ratio in the FY 2020-2021.

How to Determine Premiums to Cover Total Loss in Vehicles?

The sum assured in a claim is based on the car insurance policy and the premium you can afford to pay. The premium will be based on the make and model of your car, engine cubic capacity, age of the car, IDV, add-on covers, etc.

Higher IDVs also mean higher premiums. When declaring the IDV to your insurer, ensure you declare an amount that you can afford to pay the insurance premiums for. You also do not want to declare an IDV value that is too low, as it can result in a lower coverage amount.

Moreover, if you want to opt for the return to invoice add-on, the premium will increase. To make calculations easier, we recommend using a car insurance calculator before buying any plans.


Car insurance is the first step towards ensuring financial safety as a car owner. It can help you recover from a major financial setback in case of a total loss of the car. Moreover, opting for a return to invoice add-on when you buy car insurance can be beneficial as well.

To ensure you get the best value for money, we recommend buying four-wheeler insurance from our website, as online policies are cheaper. Buying online also makes you eligible for several discounts, saving you more money in the long run.

So, hurry on over to Tata AIG's webiste to get your car insurance policy!

TnC: Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Inclusions and exclusions mentioned in your policy wording Superceed the above mentioned details on this page.

Disclaimer / TnC

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

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In the case of reputed car insurance providers, cashless claims have a higher settlement ratio. The only cases where claims can be rejected include a failed verification or a claim raised for a situation falling in the exclusions of the insurance policy.

Are cashless car insurance policies expensive?


The cost of car insurance policies, regardless of whether they are cashless or cash-based, depends on a number of factors, such as type of vehicle, type of coverage, add-ons, deductibles and premiums, and so on. The good thing about Tata AIG's cashless car insurance policies is that you can reduce the premium cost by opting for higher deductibles.