Car Insurance Tips: If the vehicle does not have an insurance policy, the traffic police can issue a challan. Buying it is also like an art. When you buy an insurance policy for your vehicle, it is important to understand important terms like total loss and constructive total loss (CTL). These conditions determine how much compensation you will get if the vehicle is damaged or stolen.
The insurance company pays you the value of the vehicle if it is damaged or stolen. But how will it be decided when you will get the full amount of the policy? Two things are used for this – Total Loss and Constructive Total Loss (CTL). On the basis of these the insurance company will insurance Pays the full amount.
total loss
When a vehicle is so damaged that repairing it is not financially feasible, it is considered a total loss. According to the Motor Vehicle Act, if the repair cost is more than 75 percent of the Insured Declared Value (IDV) of the vehicle, then the vehicle is considered a total loss.
constructive total loss
When a vehicle is stolen or damaged but can be repaired, but the cost of repair exceeds the IDV, it is considered a Constructive Total Loss (CTL). This is a situation in which the cost of repairing is more than the market value of the vehicle. Therefore the insurance company does not spend money on repairs.
compensation
In both total loss and CTL cases, the insurance company pays the IDV to the vehicle owner. Meaning, if your car is stolen, the insurance company will pay you the full amount of the insurance policy. If the car gets damaged and the repair cost is 75 percent of the IDV or more than the IDV, you will still get the amount equal to the IDV.
