| A comprehensive policy does not hand you your repair bill. It pays the bill minus part depreciation, minus a compulsory deductible, minus salvage on a write-off — and never more than your car's IDV. |
By Dinesh Kumar S · Published 29 May 2026 · 16 min read
Verified against the Motor Vehicles Act 1938/1988 (as amended by the Motor Vehicles (Amendment) Act 2019), the standard IRDAI-filed private car package policy wordings, the General Regulations of the erstwhile India Motor Tariff (GR.9 depreciation, GR.36/GR.40 deductible and PA provisions), IRDAI circular IRDAI/NL/CIR/MOTP/158/09/2018 (₹15 lakh owner-driver PA cover at ₹750), and the IRDAI Master Circular on motor/general insurance dated 11 June 2024. Several figures below are erstwhile-tariff market standards reproduced in current policy wordings rather than numbers in primary legislation — each is flagged. Confirm the current position with your insurer and read your own policy schedule before acting.
Last updated: 29 May 2026 · Next scheduled review: August 2026.
The Short Version
1. Your payout is never 100% of the bill on a standard policy. A repair claim pays the repair cost minus depreciation on the replaced parts, minus the compulsory deductible (₹1,000 up to 1,500cc, ₹2,000 above), minus any voluntary excess you opted for.
2. On a write-off or theft you get IDV minus salvage — and the Insured Declared Value is the depreciated value of your car, not the price you paid. Only Return to Invoice restores the invoice value.
3. Depreciation is the biggest silent deduction. Glass nil, fibreglass 30%, rubber/plastic/tyres/batteries a flat 50%, metal on an age slab up to 50%. Zero Depreciation waives all of it on newer cars.
4. Third-party cover is split. Injury or death you cause is uncapped and decided by the Motor Accident Claims Tribunal; third-party property damage is capped at ₹7.5 lakh — above that, you pay personally.
5. The 2024 IRDAI rules favour you. A claim can't be rejected just for late intimation or missing documents; the surveyor must be assigned in 24 hours, report in 15 days, and the insurer settle in 7 days of the report — with penalty interest for delay.
A reader in Coimbatore sent me his repair estimate after a highway shunt: ₹1,82,000 to put his eighteen-month-old hatchback right. The cheque the insurer sent was ₹1,03,000. Nothing was rejected, no fraud was alleged — the policy simply worked exactly as written. The missing ₹79,000 was depreciation on the replaced parts, the compulsory deductible, and a couple of consumables the base policy never covered. He had assumed "comprehensive" meant "they pay for everything." It does not, and almost nobody is told the difference until the cheque arrives.
This article walks through, line by line, what a car insurance policy in India actually pays after an accident — how own-damage is settled, how a total loss or theft is valued, the exact depreciation slab that shrinks your cheque, the deductibles you always bear, the split between capped third-party property and uncapped injury claims, the ₹15 lakh owner-driver cover, the add-ons that buy back the deductions, the claim process under the 2024 rules, and how a claim quietly costs you your No Claim Bonus. Wherever a number is a market/tariff standard rather than hard law, I say so.
In This Article
- ▸ Own Damage Cover — IDV and the Two Settlement Tracks
- ▸ Total Loss, Constructive Total Loss and Theft
- ▸ The Depreciation Slab That Shrinks Your Cheque
- ▸ Compulsory and Voluntary Deductibles
- ▸ Personal Accident Cover for the Owner-Driver
- ▸ Third-Party Liability — Uncapped for Lives, Capped for Property
- ▸ The Add-Ons That Actually Change Your Payout
- ▸ The Claim Process — Intimation, Survey, Settlement
- ▸ No Claim Bonus — and Why a Small Claim Costs More
- ▸ Mistakes People Make — and How to Avoid Them
- ▸ Frequently Asked Questions
Own Damage Cover — IDV and the Two Settlement Tracks
A comprehensive policy settles your own car's damage through two completely different mechanisms, and which one applies decides how your payout is calculated.
Partial loss — the vast majority of claims. When the car is repairable, the insurer pays the actual, reasonable cost of repairing and replacing the damaged parts, then deducts depreciation on each replaced part, the compulsory deductible, and any voluntary deductible you chose. Your car's IDV plays no role here at all; the claim is settled on the real repair bill, reduced by those deductions.
Total loss — when repair is uneconomic. The payout switches to your car's IDV minus the salvage (wreck) value, with the compulsory deductible still applied. Here the repair bill is irrelevant; the IDV is the ceiling.
What IDV actually is. The Insured Declared Value is your sum insured — the manufacturer's listed selling price of your make and model, reduced by an age-based depreciation, fixed afresh at every renewal. It is the maximum the insurer will ever pay for your own car, and it is not the price you paid. A brand-new car's IDV is roughly 95% of ex-showroom price (5% knocked off in the first six months), falling to about 50% by year five. Beyond five years, the IDV is set by mutual agreement, often with a surveyor's valuation.
One practical warning: because there is no central price feed, the same model can carry different IDVs across insurers, who may legally offer a value in a band of roughly plus or minus 15%. A lower IDV trims your premium but slashes your total-loss and theft payout. An ₹800 "saving" on premium can become a ₹1 lakh-plus shortfall when the car is written off. Set your IDV as close to true market value as you can.
Total Loss, Constructive Total Loss and Theft
A car is treated as a Constructive Total Loss (CTL) when the aggregate cost of retrieval and repair exceeds 75% of the IDV. This 75% figure is not in the Motor Vehicles Act — it is a market standard rooted in the erstwhile India Motor Tariff, reproduced almost word-for-word in every IRDAI-filed motor policy. It is effectively universal, but it lives in your policy contract, not in legislation.
On total loss the payout is IDV (for the year of the claim) minus the salvage value minus the compulsory deductible. So an IDV of ₹3.75 lakh with a scrap value of ₹75,000 yields a ₹3 lakh settlement. A borderline case can turn on whether the insurer compares the gross repair cost to the 75% line, or its own net liability after depreciation and deductible — ask the surveyor which basis was used.
Theft is settled as a total loss: the full IDV, less the compulsory deductible, once the police issue a "non-traceable" or untraced report. An FIR is mandatory, and under Section 55 of the Motor Vehicles Act a theft or total-loss vehicle must be reported to the RTO. Note that on theft or total loss your accumulated No Claim Bonus can be forfeited, because the insurer can't carry a discount on a vehicle that no longer exists. Because IDV is already depreciated, even a "full IDV" payout leaves you short of what you paid — the Return to Invoice add-on is what closes that gap.
The Depreciation Slab That Shrinks Your Cheque
Depreciation is the single biggest reason your payout is smaller than your repair bill. On a partial-loss claim the insurer pays only the depreciated value of each replaced part. The schedule below comes from General Regulation 9 of the erstwhile India Motor Tariff, reproduced in standard IRDAI-filed wordings — a market standard, uniform in practice, rather than a figure in primary legislation.
| On a repair claim the insurer pays only the depreciated value of each replaced part — nil off glass, 30% off fibreglass, a flat 50% off rubber, plastic, tyres and batteries, and an age slab on metal. Zero Depreciation waives all of it. |
| Part / material | Depreciation deducted |
|---|---|
| Glass parts | Nil (0%) — full cost paid |
| Fibreglass components | 30% |
| Rubber, nylon, plastic parts, tyres, tubes, batteries, airbags | 50% flat (regardless of age) |
| Paint | 50% on paint material; if billed as one charge, material taken as 25% of total |
| All other parts (metal, wooden) | Age-based slab (below) |
| Age of vehicle | Depreciation on metal / other parts |
|---|---|
| Not exceeding 6 months | Nil |
| 6 months – 1 year | 5% |
| 1 – 2 years | 10% |
| 2 – 3 years | 15% |
| 3 – 4 years | 25% |
| 4 – 5 years | 35% |
| 5 – 10 years | 40% |
| Over 10 years | 50% |
So the insurer pays the full cost of broken glass, 70% of a fibreglass part, just 50% of a new tyre or battery, and 65% of a metal panel on a four-year-old car. A subtle trap: the IDV-fixing schedule (5%, 15%, 20%, 30%, 40%, 50% by year) is a different schedule from this part-depreciation slab. The first decides your sum insured and total-loss payout; the second decides how much is shaved off each replaced part in a repair claim. Don't confuse them.
How to waive it: Zero Depreciation. The Zero Depreciation (Nil Dep, Bumper-to-Bumper) add-on removes the part-depreciation deduction entirely on partial-loss claims — the insurer pays the full replacement cost of rubber, plastic, fibre and metal parts. You still pay the compulsory deductible, and pure consumables may still be excluded unless separately covered. In that reader's ₹1.82 lakh repair, the roughly ₹77,000 gap was depreciation — exactly what Zero Dep would have restored. It's generally offered on cars up to five years old (some insurers to seven), often with a cap of around two such claims a year. For a newer car it is the single most valuable add-on.
Compulsory and Voluntary Deductibles
Every own-damage claim — including a total loss — carries a compulsory deductible that you always bear, under the India Motor Tariff structure (IMT-22 / GR.40):
| Vehicle | Compulsory deductible |
|---|---|
| Private cars up to 1,500cc | ₹1,000 |
| Private cars exceeding 1,500cc | ₹2,000 |
| Motorised two-wheelers | ₹100 |
On top of that you can choose a voluntary deductible for a discount on your own-damage premium — the more of the first slice of a claim you agree to bear, the bigger the discount (from 20% up to 35% of the OD premium, within rupee caps). That only makes sense if you rarely claim, because you then carry a larger first chunk of every claim.
Putting the deductions together, your net out-of-pocket on a claim is the compulsory deductible, plus any voluntary deductible, plus all the part depreciation, plus anything excluded. That is exactly why a ₹3,000 scratch claim can pay out almost nothing — and why, for small damage, it is often not worth claiming at all.
Personal Accident Cover for the Owner-Driver
Every motor policy — comprehensive or third-party only — must include a Compulsory Personal Accident cover of ₹15 lakh for the registered owner-driver, unless you already hold an equivalent standalone personal-accident policy of ₹15 lakh or more. It protects you, the owner-driver — not passengers, pillion riders or a paid driver, who each need separate add-on cover.
The ₹15 lakh sum insured, at a fixed premium of ₹750 a year, was set by IRDAI in its circular of 20 September 2018 — which implemented a 2017 Madras High Court judgment that the earlier ₹1–2 lakh covers were grossly inadequate. A later circular, effective 1 January 2019, unbundled the cover so you can hold it as a standalone policy. Both the ₹15 lakh figure and the ₹750 premium remain unchanged as of May 2026. (A separate GST exemption on individual personal-accident and health insurance took effect on 22 September 2025, lowering the tax-inclusive cost, but the base premium is still ₹750.)
The cover pays 100% of the ₹15 lakh on death or permanent total disablement, 100% for the loss of two limbs or the sight of both eyes, and 50% for the loss of one limb or the sight of one eye. The owner-driver must hold a valid driving licence at the time of the accident, and the usual exclusions apply — intentional self-injury, suicide, and accidents under the influence of alcohol or drugs.
Third-Party Liability — Uncapped for Lives, Capped for Property
Third-party cover is mandatory under Section 146 of the Motor Vehicles Act 1988 — the "Act Only" cover. It pays the people you harm; it never pays for your own car or your own injuries beyond the PA cover. Driving without it is a criminal offence (₹2,000 for the first offence, ₹4,000 thereafter), now easily checked through the VAHAN database.
The crucial split: third-party property damage is capped at ₹7.5 lakh for private cars. This is not a number in the Motor Vehicles Act — the Act's only statutory property limit is the historic ₹6,000. The ₹7.5 lakh is a tariff/market standard from the erstwhile India Motor Tariff, carried into every standard car policy. If you damage someone's property beyond ₹7.5 lakh — entirely possible if you write off another expensive car — you personally pay the balance. Proposals to raise this dated cap have been discussed but none has been enacted as of May 2026, so treat any higher figure as speculative until notified.
For third-party injury or death, by contrast, there is no statutory ceiling. Those claims go to the Motor Accident Claims Tribunal, which fixes "just compensation" mainly on the victim's earning capacity, age and dependants, and awards can run to tens of lakhs or more. The insurer pays per the tribunal's award rather than negotiating directly as it would on your own-damage claim. Under the Supreme Court's "pay and recover" principle, even if you breached a policy condition the insurer must first pay the third-party victim and may then recover from you.
The Add-Ons That Actually Change Your Payout
Add-ons exist to buy back the money the standard policy deducts. They're available only on a comprehensive or own-damage policy, never on third-party-only cover, each at extra premium.
| Add-on | What it changes about the payout | Best for |
|---|---|---|
| Zero Depreciation (Nil Dep / Bumper-to-Bumper) | Waives part-depreciation on repair claims — full replacement cost paid (you still pay the deductible) | New / expensive cars, city driving; usually ≤5 yrs |
| Return to Invoice (RTI) | On total loss/theft, pays the original invoice value instead of depreciated IDV | New cars (≤3 yrs), high-theft areas |
| Engine Protection | Covers engine/gearbox damage from water ingress or oil leakage — excluded by the base policy | Monsoon / flood-prone cities |
| Consumables Cover | Pays for oil, lubricants, nuts, bolts, coolant, AC gas — normally excluded | New cars; pairs with Zero Dep |
| NCB Protection | Lets you keep your No Claim Bonus despite (usually up to 2) claims | High-NCB drivers (45–50%) |
| Roadside Assistance | Towing, on-site repair, fuel, flat-tyre, lockout; does not affect NCB | Long-distance / highway drivers |
The mental model: Zero Dep solves partial losses, Return to Invoice solves total loss and theft — they are not substitutes, and a new car ideally carries both for its first three years. Engine Protection and Consumables plug exclusions, not depreciation. NCB Protection protects a discount, not a payout. And even with every add-on, no policy ever pays a true 100% — the compulsory deductible always applies, and some wear-and-tear items stay excluded.
The Claim Process — Intimation, Survey, Settlement
The process is more forgiving than it used to be, thanks to the 2024 rules, but the order of steps still matters.
| Under the 2024 IRDAI rules the timeline is tight: surveyor assigned within 24 hours, report within 15 days, settlement within 7 days of that report — with penalty interest if the insurer is late. |
1. Intimate the insurer immediately — ideally within 24 to 48 hours. A claim can no longer be rejected merely for delayed intimation (the 2024 rules and Supreme Court precedent are clear), but prompt intimation keeps things smooth.
2. File an FIR if required, and photograph the scene and the damage.
3. Don't start repairs until the surveyor inspects. Unauthorised repairs can be rejected, and for any claim above ₹50,000 a registered surveyor must be appointed.
4. Surveyor assessment. Under the IRDAI Master Circular of 11 June 2024, the surveyor must be assigned within 24 hours and submit the report within 15 days.
5. Choose cashless or reimbursement. Cashless means repair at a network garage with the insurer settling directly (you pay only the deductible, depreciation and excluded items); reimbursement means you pay any garage upfront and claim it back against bills.
6. Settlement. The insurer must settle within 7 days of receiving the surveyor's report, and delay attracts penalty interest (bank rate plus 2%).
When do you actually need an FIR? You need one for theft, for any third-party injury or death, for major accidents involving third parties, and for hit-and-run. You usually don't need one for minor own-damage (scratches, dents, a single-vehicle bump with no injury or third party), for natural-calamity damage like flood or storm, or for vandalism. Many states now allow an online e-FIR for minor incidents.
No Claim Bonus — and Why a Small Claim Costs More
The No Claim Bonus is a discount on your own-damage premium only (never on the IRDAI-fixed third-party premium) for each consecutive claim-free year. The slab is standard across insurers:
| Claim-free years | NCB discount on OD premium |
|---|---|
| After 1 year | 20% |
| After 2 years | 25% |
| After 3 years | 35% |
| After 4 years | 45% |
| After 5+ years | 50% (capped) |
One claim resets the bonus to nil at the next renewal, unless you hold NCB Protection (which usually allows up to two claims before the bonus drops). The bonus is attached to you, not the car, so it transfers when you change insurer or buy a new car on producing an NCB certificate — but a lapse of more than 90 days after expiry destroys it permanently, so renew within the grace window.
The economics are the real lesson. On a car with an ₹15,000–18,000 own-damage premium, a 50% NCB is worth ₹7,500–9,000 a year. A small claim that pays only a few thousand rupees after depreciation and the deductible can cost you far more than that in lost bonus over the years it takes to rebuild. A useful rule of thumb: don't claim for small damage unless the repair clearly exceeds ₹15,000–20,000, or you hold NCB Protection, or it's a total loss or theft.
Mistakes People Make — and How to Avoid Them
Most of the disappointment around motor payouts comes from a handful of avoidable errors.
Setting IDV too low to save premium. The "saving" is tiny; the shortfall on a write-off is large. Keep IDV near true market value.
Assuming comprehensive means 100%. It never does — depreciation and the compulsory deductible always apply. Buy Zero Dep on a newer car if you want close to full repair value.
Claiming for tiny damage. A small claim can wipe out a 50% NCB worth far more than the payout. Pay for minor scratches yourself.
Starting repairs before the survey. Unauthorised repairs can be rejected. Wait for the surveyor.
Skipping Return to Invoice on a new car. Without it, even a theft payout is the depreciated IDV, not what you paid.
Letting the policy lapse. A gap of more than 90 days destroys your NCB and leaves you uninsured and illegal. Renew on time.
Forgetting the ₹7.5 lakh third-party property ceiling. Damage above it comes out of your own pocket — a real risk in a city full of expensive cars.
Frequently Asked Questions
How much does an insurance company pay for a car accident in India?
For your own car, it pays the repair cost minus depreciation on the replaced parts minus the compulsory deductible (₹1,000 up to 1,500cc, ₹2,000 above) minus any voluntary excess. For a write-off or theft, it pays the IDV minus the salvage value. It never pays the invoice price unless you hold Zero Depreciation (for repairs) or Return to Invoice (for total loss or theft).
How much compensation can I get for a car accident?
For your own car's damage, up to its IDV. For a third party you injure or kill, there is no cap — the Motor Accident Claims Tribunal decides based on income, age and dependants. For third-party property you damage, the maximum is ₹7.5 lakh.
Which is better, comprehensive or zero dep?
They are not alternatives. Comprehensive is the base policy; Zero Depreciation is an add-on on top of comprehensive that removes part-depreciation from repair claims. For a car under about five years old, comprehensive with Zero Dep is the clear winner.
Does car insurance cover 100%?
No. Even with Zero Depreciation the compulsory deductible always applies, and consumables or wear-and-tear items may be excluded unless separately covered. Total-loss payouts are capped at the IDV minus salvage, unless you hold Return to Invoice.
What is the total loss car insurance settlement in India?
It is the IDV for the year of the claim, minus the salvage (wreck) value, minus the compulsory deductible. A car is treated as a total loss when the repair cost exceeds about 75% of its IDV. Return to Invoice restores the original invoice value instead.
How do I claim car insurance for damage without an FIR online?
For minor own-damage, natural-calamity damage, or vandalism with no third party and no injury, no FIR is needed. Intimate the insurer through its app or website, upload photographs, let the surveyor inspect, then choose cashless or reimbursement. Many states also allow an online e-FIR for minor incidents.
Does car insurance premium increase after claiming?
Indirectly, yes. A claim usually wipes out your No Claim Bonus (unless you hold NCB Protection), so your renewal own-damage premium loses the 20–50% discount. The third-party premium itself is unaffected.
Disclaimer: This article is for general information and education only and is not legal, financial, or insurance advice. The Coimbatore repair example is an illustrative composite of common own-damage shortfalls, not the file of any one identifiable person. Several figures here — the 75% total-loss threshold, the GR.9 depreciation slabs, the ₹1,000/₹2,000 compulsory deductibles, the ₹7.5 lakh third-party property cap, and the No Claim Bonus slab — are market standards from the erstwhile India Motor Tariff reproduced in current IRDAI-filed policy wordings, not numbers in primary legislation; IDV, add-on pricing and add-on eligibility vary by insurer. Figures and rules (including the ₹15 lakh / ₹750 owner-driver PA cover and the 2024 IRDAI claim timelines) are stated to the best of the author's knowledge as of the date of writing and may change; confirm the current position with your insurer and read your own policy schedule before acting. FinanceGuided.com is not a SEBI-registered adviser, an IRDAI-licensed broker, or an advocate, sells no products, and earns no commissions. Reproduction of any portion of this article requires written permission from the publisher.
Dinesh Kumar S
Founder & Author — Finance Guided · B.Sc. Mathematics, M.Sc. Information Technology · Chennai, Tamil Nadu
Dinesh writes a regulation-reader's column on Indian personal finance — every claim anchored to the actual Act, regulation, circular, or tariff provision it comes from. No product sales, no commissions, no paid placements.
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