Total Loss Bike Insurance Claim: A Complete Guide

Posted on: Dec 28, 2021 | 3 min | Written by: HDFC ERGO Team

Total Loss Bike Insurance Claim: A Complete Guide

Constructive Total Loss in Bike Insurance - What Is It?

Sometimes, accidents can leave you in a situation where, despite having 2 wheeler insurance, you might wonder if the insurer will pay for the damage. One such situation is irreparable damage to your bike. It's a situation where the cost of repairs surpasses the current market value of your bike or when repairing it is nearly impossible. To deal with such cases, insurers have incorporated a term called constructive total loss in their policies. If you are unaware of this term, read this blog to the end.

What is a total loss/constructive total loss bike insurance claim?

The term total loss or a constructive loss in a 2 wheeler insurance comes into play when your bike is severely damaged in an accident. A constructive total loss occurs when the damage to the bike is such that the cost of repair equals or surpasses the bike's original cost or the sum insured. To understand this term in a better way, look at the below pointers.

• Total constructive loss is when your bike is irreparably damaged.

• Total constructive loss is when the cost of repairs surpasses 75% of the bike's insured declared value IDV.

• When you file a 2 wheeler insurance claim for total loss, the insurer pays the IDV after deducting the compulsory deductibles.

What to do in case of a total loss/constructive total loss claim?

In case your bike is damaged severely, go through your 2 wheeler insurance provider’s claim settlement process carefully. Inform your insurer right away after your bike suffers damage. Following your intimation, the insurer will send a surveying officer to the site to assess the extent of the damage.

Following the assessment, if the surveying officer finds that your bike can be repaired, but the repair costs surpass the IDV, the insurer will categorise your damage under ‘beyond economical repairs’. Keep in mind, the insurer records total constructive loss only if the repair value, or say, insurer’s liability surpasses 75% of IDV. The insurer, after deducting the mandatory deductible, pays the insured declared value that is inclusive of your bike's wreck value.

How to file a total loss/constructive total loss claim?

When your bike is damaged irreparably, and you want to make a total constructive claim, here are the steps to take with your 2 wheeler insurance company.

Step 1 - Visit the official website of the company.

Step 2 - Go to the claim section, enter your policy details, and answer a few questions.

Step 3- Upload a soft copy of all relevant documents.

Step 4- Click on the 'Submit' button to raise your claim request.

How is bike insurance total loss/constructive total loss calculated?

In case of total constructive loss, a 2 wheeler insurance company usually refers to the following table to calculate insured declared value (IDV).

Age of the bike	IDV percentage (respect to the ex-showroom price)
If your bike is less than six months old.	95%
If your bike age is between 6 months and 1 year.	85%
If your bike age is between 1 year and 2 years.	80%
If your bike age is between 2 years and 3 years.	70%
If your bike age is between 3 years and 4 years.	60%%
If your bike age is between 4 years and 5 years.	50%
If your bike is older than 5 years.	IDV is decided after the mutual consent of the insurer and policyholder.

To understand this table in a better way, let's take an example.

Assume Mr Venkatesh, a Bangalore-based IT engineer, has a bike that got irreparably damaged in an earthquake. The bike he owns has an ex-showroom price of INR 80,000, and he bought it 8 months ago. In this case, the insured declared value (IDV) will be INR 68,000, as per the table outlined above. Here, Mr Venkatesh is eligible to receive the claim amount of INR 68,000 (exclusive of mandatory deductibles) from the 2 wheeler insurance company.

How important is it to cancel the RC after the total loss of the bike?

Most importantly, the cancellation of the Registration Certificate (RC) after a bike has become a total loss is of eminent importance:

1. Legal Obligation

Like any legal process, it observes local regulations and avoids future legal hassles.

2. Claim Settlement

By cancelling the RC, you set a smoother path for your two-wheeler insurance claims to be compensated for the total loss.

3. Avoid Fraud

Cancelling the registration prevents fraud and forgery concerning your bike, which would be especially true if you have third-party bike insurance.

4. Clear Transfer of Ownership

It works as legit insurance that ownership transfer has been done to protect you from being liable for anything concerned with the bike in future.

How to cancel the RC?

These are the steps to follow to cancel the RC (Registration Certificate) of your bike.

1. Gather Documents

Gather the requisite documents: original RC, copy of the insurance policy, and police FIR (First Information Report) if applicable.

2. RTO Visit

Go to your local Regional Transport Office (RTO) to ask for a cancellation form.

3. Application Submission

Fill out the form and submit the same with the necessary documents.

4. Fees Payment

Make payment of any applicable fees for the cancellation process.

5. Confirmation

Get a receipt or confirmation of the cancellation for your record.

Conclusion

The riders need to understand total loss and constructive total loss bike insurance claims. A sufficient two-wheeler insurance policy and third-party bike insurance protect one's investment and provide financial security in the event of serious damage or theft.

Frequently asked questions

1. What is a total loss bike insurance plan?

Total loss bike insurance means that if your motorcycle is stolen or damaged beyond repair, you are compensated for the motorcycle's market value.

2. What is the process of filing a total loss claim?

To file a total loss claim, contact your insurance company, submit all papers, and follow their procedure on claims.

3. How is the claim amount calculated?

The claim amount is usually determined by the market value of the motorcycle at the time of loss, giving regard to age, condition, and depreciation.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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