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What is Constructive Total Loss in Car Insurance?


Written by Udit Varshney

Updated Apr 21, 2021

What is the difference between constructive total loss and total loss? Read this article to find out.

Having car insurance can give you a layer of protection from the risks involved in driving on a daily basis. The compensation offered by insurance providers in case of a mishap will provide you with financial stability in a moment of crisis. Since insurance is available for purchase online now, it is even more convenient. You can compare the different insurance providers, the quotes they offer and their network of cashless garages to make a suitable choice. However, before purchasing a policy it is important to know some of the basic terms used in insurance. It will ensure you make an informed choice when you select your policy. In this article, we will talk about the term total loss and what it entails.

What is Constructive Total Loss in Car Insurance?

What is Total Loss in Car Insurance?

When there is a mishap that renders the car beyond repair and use and the cost repair far exceeds the Insured Declared Value offered by the insurance holder it is called a case of total loss. In such cases, it makes no sense for the insurance holder to repair the car, instead, it is best scrapped.

What is Constructive Total Loss in Car Insurance?

The car insurance policy decides the maximum compensation they will provide to the insurance holder in case of mishap by calculating the Insured Declared Value of the car. This takes into account the depreciation of the car. In cases where due to a mishap the cost of repair exceeds the IDV offered by the insurance holder, it is called a case of constructive total loss.

What is the Difference Between Total Loss and Constructive Total Loss?

In cases of total loss, the car is no longer in any condition and cannot be restored to a usable condition with repairs. On the other hand, constructive total loss is declared when the repair costs of the vehicle surpass the IDV by 75%.

What do you Need to Do if the Insurance Provider Declares Total Loss?

Once the claim has been filed and approved as a case of total loss or constructive total loss the insurance holder must surrender their car to the insurance company. The vehicle will no longer belong to them. All other objects related to the car such as keys and documents must also be handed in. After this is done the insurance company will give the insurance holder the IDV of the car.


In a nutshell, total loss occurs when the car is damaged beyond use and repair. On the other hand, constructive total loss is where the cost of car repairs will go beyond the IDV of the car or 75% of the IDV of the car. This form of damage only occurs in extreme cases of accidents such as head-on collisions. Having a comprehensive insurance plan in such cases can be a boon. When purchasing insurance make sure to check the add-on covers that insurance companies offer as they can also make a significant difference at the time of claim settlement. Understanding insurance basics is important, if you want to know more about it or have specific queries make sure to check out our other articles. 

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.


Written by Udit Varshney

Udit has built B2C segments across various industries and has had significant contributions to the insurance sector. Read More

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