3. Total Loss & Constructive Total Loss

Total Loss & Constructive Total Loss

In page 2 of the Motor Insurance application, these magic words are found – Total Loss and Constructive Total Loss. The wording is as follows: “The schedule of age-wise depreciation as shown alongside is applicable for the purpose of Total Loss/Constructive Total Loss (TL/CTL) claims only. They have given age-wise depreciation schedule also in the page no. 2 of the application”.

If somebody takes money from you promising to explain and do everything and in reality, he won’t do anything but only takes the money…what would you call that person? How would you describe him? Don’t you call him a thief? This is exactly all the motor insurance companies are doing. They never explain anything!

I have no notion of Total Loss and Constructive Total Loss. I am an uneducated truck driver living hand to mouth. I insured my truck because it is compulsory! Otherwise, I would have cared a tappan! Having paid a whopping Rs 30,000 as premium for motor comprehensive I don’t know what is Total Loss and Constructive Total Loss. The insurance application does not define these two terms. The policy document, which can only be made available on request at application, which can be received only after paying the premium does not talk about Total Loss. It only talks of Constructive Total Loss. Can somebody tell what these two terms mean?

Total Loss – Total loss is a condition of real and personal property when it is damaged beyond repair. For example, in motor insurance when a car meets with an accident and became pulp then that situation is called as total loss. It is beyond repair. Under those circumstances the insurance company will pay the total value of the car to the owner.

Constructive Total Loss – It is partial loss of such significance that the cost of restoring the damaged property will exceed the value after restoration. For example, a car met with an accident. The value of the car before accident is Rs 10,00,000. The damage in the accident is so big that you will have to spend 75% of the value of the car or more then it is CTL. Under these circumstances the insurance company would say that this car or vehicle is considered as constructive total loss. This definition, yes, it is stated in the policy wording.

People generally congratulate when you buy a new vehicle but looking at the state of motor insurance policy, I pity on the person who would buy a new vehicle for through the compulsory motor insurance the owner is driving into unknown. May the God bless him!


About the Author

Dr. K. Raja Gopal Reddy is a seasoned internationally qualified Insurance professional.

What you are reading here, may not answer all the questions we have, but has the absolute power of asking unsettling questions which increase the interest in the strange world, and show the contradictory wonders lying just below the surface of the commonest things of life. Look at this disturbing but beautiful thought of Friedrich Nietzsche “God is dead. God remains dead. And we have killed him”.

Dr. Reddy can be reached at: raja66gopal@gmail.com

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