Motor insurance

Motor Insurance Constructive Total Loss – All You Need To Know

What Is Constructive Total Loss? A constructive total loss for a vehicle refers to the extensive damage caused to the vehicle that amounts for repairs would equal or surpass the vehicle's insured…

What Is Constructive Total Loss?

A constructive total loss for a vehicle refers to the extensive damage caused to the vehicle that amounts for repairs would equal or surpass the vehicle's insured cost. If the insurance provider's liability exceeds 75% of the vehicle's IDV, it is termed as a constructive total loss. The loss is often incurred in cases of head-on collisions. As per the survey, about one in seven-car accident quality for a constructive total loss.

From an insurance point of view, When the insurance company repair liability exceeds 75% of the vehicle's IDV, then the claim is settled on a total loss basis.

Motor Insurance Claim Types

There are three types of claims under a motor insurance policy. The insurance claim could be for:

Third-Party Claim

An insurance policy is an insurance agreement that provides coverage to the buyer or the Policyholder by the provider, i.e., the insurance company. Any other party other than these two is known as a third party. If in case, a third party person gets involved in an accident and suffers any injuries due to the negligence of the Policyholder, he is eligible to seek compensation from the insurance provider for any losses under section 141 of MV act.


Insurance policy is a contract between an Insurance company and Policyholder any other party other than the two are termed as the third party. Any such third party person sustains Simple, grievous, or fatal injuries due to negligence of an Insured vehicle driver; then, the said third party can seek compensation from the Insurance company for his loss under section 141 of MV Act; The liability is unlimited.


The same is extended to Third Party property also, but Insurer caps the limit of such liability. Often referred to as a liability claim, the third party (the injured person) is entitled to request medical expenses, disability compensation, amenities, or income loss even if these things are not covered under the insurance policy.


If a third party is involved in such accidents, the Policyholder should immediately report to the police and the insurance company. On the contrary, if you are the third party, you must acquire all the details regarding the insured vehicle and claim the incident ahead.

Own Damage Claim

This is where your vehicle is damaged in an accident. The Policyholder must be in his best prudent manner by capturing the spot photos and video of the vehicle, he/ She should immediately report the accident to police officials if two or more vehicles are involved in the accident or if someone has got injured. Intimate the insurance company without any delay If you own a commercial vehicle, the insurance provider performs a survey at the accident spot, only after which you are allowed to move the vehicle.


If your vehicle is a commercial vehicle, then the Insurer needs a Survey to be done at the accident spot post which vehicle is to be moved from the accident spot.

Theft Claim

In case your vehicle is stolen, inform the police and insurance company at the earliest with all the necessary details as delay in intimating a theft claim can even get your claim rejected. Theft claim requires special documentation to be duly filled in, for the insurance company and a couple of Legal procedures from administrative authorities. It also requires you to surrender your vehicle keys and cancel your vehicle registration or transfer your vehicle title to the insurance company.

From the above two types of claim, where does constructive total loss fit in?

Some accidents may cause irreparable damage to your vehicle. These severe damages can cost the insurance company more than the actual insured cost for the vehicle. In such a scenario, the motor insurance claim is declared as a constructive total loss.

Once you file for such a claim, a surveyor visits you to inspect the damages and measures for the incurred loss. If this Insurance company liability on repairs exceeds 75 percent of the insured's declared value, it is proclaimed as a CTL, constructive total loss.

However, the constant rise in the number of road accidents has resulted in one on every seven insured persons claiming CTL. Severe accidents resulting in total wreckage, head-on collisions often recruits for a constructive total loss.

What happens when the motor insurance claim is declared CTL?

In such cases where the insured vehicle suffers irreparable damages, and the Policyholder claims a constructive total loss, the vehicle's ownership is transferred to the insurance company. You need to surrender the documents and keys of the vehicle to the company. The next procedure involves the company paying the insured declared value policyholder after deducting the excess expenses. Once the claim is settled, the insurance policy expires, and you don't need to pay your premiums further after the final settlement.

What is the difference between total loss and constructive total loss?

Total loss is considered when the vehicle is damaged to such an extent that it is beyond repair. In such cases, the vehicle cannot be restored to the condition before the accident.


A constructive total loss is considered when the vehicle is severely damaged but can be repaired to its pre-loss condition. In such cases, the insurance company assesses the damages. It evaluates if Insurer liability on repairs exceeds 75% of IDV of the vehicle Fixing the vehicle in such instances often costs much higher than the costs of buying a new one.

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