How much money do you get from the insurance company if the car is stolen? Know the real mathematics of IDV and the complete process of step-by-step claim settlement.

Having a vehicle stolen outside the home, office parking or market is a major mental and financial blow for any vehicle owner. In such an unfortunate situation, the victim’s biggest hope rests on his motor insurance policy. But the big question on most vehicle owners’ minds is how much money the insurance company actually pays after it’s stolen—does the full purchase price of the new vehicle get covered, or is there a deduction? Apart from this, if there is no correct information about the legal procedures that have to be gone through between the police, RTO and the insurance company to get the claim, the claim may remain stuck for months or may even get rejected.

The situation of vehicle theft is considered as ‘Total Loss’ in the language of insurance. The amount you get under the claim depends on the type of your policy:

• IDV (Insured Declared Value): If you have a standard comprehensive motor policy, the company will pay you the amount that is mentioned as ‘IDV’ on your policy document. IDV is the maximum legal market value that is decided at the time of taking the policy. As the age of the vehicle increases, IDV decreases every year due to depreciation. Therefore, in case of theft, you get only the existing IDV of the vehicle as a claim.

• Return to Invoice (RTI) add-on: If you have additional cover of ‘Return to Invoice’ in your policy, the situation changes completely. Under this add-on, the company gives you a full refund up to the original purchase invoice price of the vehicle (On-road/Ex-showroom Price), road tax and registration charges. That means you get back the entire amount equivalent to the purchase of a new vehicle.

• Zero Claim in Third Party Policy: It is important to note that if you only have compulsory ‘Third Party Only’ insurance, then you do not get a claim of even a single rupee from the insurance company in case of theft. For this, it is mandatory to have ‘Own Damage’ or comprehensive cover.

To secure the insurance amount after vehicle theft, a timely and accurate legal process has to be followed:

Step 1: File an FIR immediately in the nearest police station

As soon as you get information about the vehicle being stolen, without wasting a moment go to the police station having jurisdiction over the incident site and lodge an FIR. In the FIR, clearly mention the vehicle number, chassis number, engine number and the exact time of the incident. Get a certified copy of the FIR immediately.

Step 2: Inform the insurance company in time

Immediately after filing the FIR (usually within 24 to 48 hours), formally report the theft on your insurance company’s toll-free number, mobile app or nearest branch. Delay in giving information may cause hindrance in claim. The insurance company will allot you a claim intimation number and appoint an authorized investigator.

Step 3: Written notice to the concerned RTO

Report the theft of your vehicle by giving a written application to the RTO (Transport Office) where your vehicle is registered. The RTO will mark the vehicle record as ‘Stolen’ in its database and give you an Acknowledgment. This step is necessary so that you do not face legal liability if the stolen vehicle is misused for any illegal activity.

Step 4: Obtain an ‘Untraced Report’ from the police

Police begin investigation to find the vehicle. If the police is unable to recover the vehicle, usually within 30 to 90 days, the Investigating Officer (IO) files an ‘Untraced/Final Report’ in the court. After this report is accepted by the Magistrate, its certified copy has to be handed over to the insurance company. Without this report no company releases the final claim amount.

After completion of investigation the insurance company will ask for the following original documents from you:

1. Fully completed and signed claim form.

2. Certified copy of FIR and final untraced police report.

3. Original RC (Registration Certificate) of the vehicle.

4. Both original keys of the car. If a key is missing, satisfactory reason and affidavit must be given.

5. Signature on RTO Form 28, 29 and 30 (document of transfer of ownership of vehicle).

6. Letter of Subrogation and Indemnity Bond executed in favor of the insurance company.

7. If there is a bank loan (Hypothecation) on the vehicle, then Form 35 and NOC from the concerned bank.

8. Bank account details (cancelled cheque) and PAN/Aadhar card.

After all the documents and keys are submitted, the legal department of the insurance company verifies the documents. If there is an outstanding loan on the vehicle, the insurance company first repays the outstanding loan from the bank and transfers the remaining amount to the bank account of the vehicle owner. If the vehicle is completely loan free, the entire IDV amount of the policy is transferred directly to the customer’s account through NEFT/RTGS. The entire process usually takes 60 to 120 days, but by submitting the right documents at the right time, the claim gets passed 100% without any hitch.