Total Loss Car Insurance

With ever-changing driving conditions, having total loss insurance can safeguard you from unexpected repair costs and depreciation. By covering the difference between your car's market value and the cost of repairs, this insurance helps you recover quickly and potentially assists in acquiring a replacement vehicle.

With ever-changing driving conditions, having total loss insurance can safeguard you from unexpected repair costs and depreciation. By covering the difference between your car's market value and the cost of repairs, this insurance helps you recover quickly and potentially assists in acquiring a replacement vehicle.

Find out more about this insurance in the forthcoming sections of this page. 

What is Total Car Loss?

Also known as ‘total loss coverage’ or ‘total loss protection’, total car loss insurance is a type of car insurance that financially covers you in case your vehicle is declared a total loss. Total loss implies losing your vehicle to a major car accident, theft, or natural disaster. The extent of coverage depends on the insurance provider in general. 

When a car is called a total loss, it is damaged to the extent that restoring it would be more expensive than buying a new car. 

When is a Car Declared a Total Loss?

It is important to note that not every accident or natural disaster can lead to a total car loss. Here are the scenarios that an insurance provider considers before declaring the car as a total loss -

• REPAIR COSTS - If the damaged car’s repair cost is more than 50% of the actual value of the car before the incident occurred, the provider can declare a total vehicle loss. This threshold helps determine whether repairing the vehicle is economically viable compared to replacing it.
• MAJOR STRUCTURAL DAMAGE - If the critical components of your vehicle such as your car’s chassis number or pillars are severely damaged and cannot be repaired or replaced, the car may be declared a total loss. This includes situations where significant repairs like pulling, cutting, or welding are needed to address structural damage.

 

 

How is Total Loss Car Estimated?

The total car loss claim is estimated through a comprehensive evaluation of the car. The following are the aspects that a provider considers -

• Damage Assessment - An expert from the insurance company checks the extent of the damage to determine if repairs are possible.
• Market Value Estimation - The pre-accident value of the car before is calculated, considering its age, depreciation, market demand, and any previous damage.
• Cost Comparison - The costs required to repair the vehicle are compared to the car's pre-accident value. If repairs cost exceeds more than 50% of the car's value or involve significant structural repairs, the car is considered a total loss.

Total Loss Car Insurance Calculator UAE

When the total loss car insurance is being determined, the damaged car needs to meet specific parameters (already discussed above). Here’s a guide to help you understand the process and factors involved: 

• Depreciation value
• Model and the make of the car
• Visible wear and tear
• Car’s production year
• Car mileage
• Market Demand 

To determine the total loss of a car, follow these steps: 

• Calculate the Actual Cash Value (ACV) based on the vehicle's market value before the accident.
• A total loss is declared when damage and repair costs exceed 50% of the ACV.

Several factors influence the ACV, leading to varying outcomes. Sometimes, minimal damage can result in a total loss for an older car, especially if it's over ten years old. Similarly, a new car with significant damage might also be declared a total loss.

 

 

Process of Total Loss Car Insurance Settlement in UAE

The following is the process of total loss car insurance settlement in the UAE -

• Report the Accident to the Police - Immediately report the accident or theft to the police. Obtain a police report which is necessary for filing an insurance claim. 
• Connect with Your Insurance Company - Inform the insurance company about the accident or the theft and provide all the relevant details. Mention everything from the police report to accident scene photographs as proof and other important documents. 
• Claim Assessment - The insurance company will assess the damage to your car. If repair costs exceed a certain percentage of the insured value, your car might be deemed a total loss. It's crucial to consider the responsiveness of the insurance claim team when renewing your policy.
• Declaration of Total Loss - If your car is declared a total loss after the assessment, the insurance company will provide a valuation based on the car’s market value, accounting for depreciation.
• Review the Assessment and Negotiate the Offer Provided - Review the settlement offer from the insurance company. If the offer seems inadequate, negotiate by providing additional evidence or seeking professional car valuation services in the UAE.
• Accept the Formal Offer - Agree on the settlement amount and sign the necessary documents to finalise the claim. The insurance company will then provide you with a settlement check or transfer the funds to your bank account.
• Transferring the Ownership - Transfer vehicle ownership to the insurance company, as they will handle the salvage or disposal process. This step is essential.
• Cancel the Insurance Policy - To avoid future premiums once your car is declared a total loss, cancel your insurance policy by informing your insurance company. Before getting a new policy, take time to understand the differences between comprehensive and third-party car insurance to make an informed decision.

What Happens After a Total Loss Car is Declared?

When your car is declared a total loss, the insurance company will calculate indemnity based on the insured value at the start of the policy, with a yearly depreciation of 20%. Although this depreciation might seem unfavourable, it's legal. The indemnity amount depends on how long you've had the coverage. If your policy is over five years old, expect a reduced indemnity. 

If a total loss happens within a year of buying the policy, you can negotiate a better deal. In such cases, the insurance provider might cover the cost of a comparable replacement vehicle.

When and How is Your Vehicle Considered a ‘Total Loss’?

How is Compensation for Total Loss Car Handled?

The compensation of your total car loss varies on the type of car insurance you have in the UAE. Here’s how the 2 main car insurance types handle the total car loss settlement in UAE -

• Comprehensive Insurance - Compensation is calculated on the agreed value of the car, minus a 20% depreciation.
• Third-Party Insurance - Compensation for third parties is based on the car's market value at the time of the accident. 

 

 

Tips to Deal with a Total Loss Car Claim

Here are some tips to handle total car loss insurance claim -

• Document the Accident - Obtain a detailed government report and take photos of the damages.
• Contact the Insurance Company- Inform your insurance company right away and provide the necessary reports.
• Cooperate with the Insurance Expert - Work with the insurance company's appointed expert during the car inspection.
• Read the Insurance Document - Understand your insurance policy's terms and conditions.

How to File Your Car Insurance Claim in the UAE

Frequently Asked Questions