Essential facts about total loss in car insurance: A simple guide for Filipino drivers

If you are new to the world of car insurance, then chances are that you haven’t heard of ‘Total Loss’ coverage. The term might seem a bit overwhelming, and the circumstances leading to it are very stressful. This particular coverage is the only ray of hope for a car owner during some of the most difficult times.

In this guide, we’ll be breaking down the ‘total loss’ coverage simply and practically - so that you know exactly what to do if your vehicle gets damaged beyond repair.

So, without further ado, let’s get started…

Total loss in the world of car insurance

It is pretty standard for an average car owner to imagine the worst-case scenario when their car is declared a ‘total loss’ unit. However, the term is layered with a more specific meaning.

When is an insured vehicle considered a total loss?
In the Philippines, policy providers consider a car a total loss when the cost of repairs exceeds its fair market value. In simple words, if repairing the vehicle will cost more than its current value, the insurer may decide not to fix it.

Everyday situations leading to a total loss scenario

Let us now discuss some of the most common scenarios leading to a vehicle being declared a total loss -

• The car is submerged in floodwater water
• Severe collision with another vehicle
• Stolen or unrecovered
• Severe damage to the chassis or frame

Signs your vehicle might be declared ‘total loss’

You were recently involved in a significant accident and filed a claim. Here are a few signs that your provider will classify the car as a total loss -

• Severe structural damage to the body; so if the car’s frame or chassis gets broken beyond repair, or the repair is way too costly and risky.
• When a car is submerged in flood water, it can cause damage to the engine, transmission, wiring, etc.

Also Read: Passenger safety: What does your car insurance cover in an accident?

Car declared a total loss? Here’s the initial process & what follows

If your vehicle is declared a total loss by your provider, it is not you or your mechanic who makes the decision; a licensed claim adjuster assigned by the provider makes the call. The process is straightforward and involves the following steps -

Step 1: The adjuster reviews the damage caused to the insured vehicle.
Step 2: Next, the provider determines your vehicle’s current fair market value, along with a repair estimate that includes parts and labour costs.
Step 3: If the repair cost exceeds 75% of the vehicle’s fair market value, the provider declares the car a total loss.
Step 4: You can either accept or reject the classification. While rejection would lead to a second opinion or review, acceptance leads to payout, documentation, and vehicle turnover.

Also Read: Understanding Personal Accident Car Insurance Coverage in the Philippines

Total loss claim process - In detail

Once a vehicle has been decelerated to a total loss by the provider, here’s what follows -

• First, the payout occurs, in which the provider offers a settlement equal to the car’s fair market value minus the deductible/depreciation.
• Next, you can retain the vehicle for release. If not, the provider will take possession of the damaged unit for auction purposes.
• Lastly, the car insurance policy is considered fulfilled for the unit. The policy ends.

Total Loss Claim: Common requirements & best practices

Here is the list of documents required to file a total loss claim in the Philippines -

• Vehicle OR/CR
• Driver’s license
• Police report
• Duly accomplished claim form
• Photos of the damaged car
• Insurance policy

Also Read: How to claim CTPL Insurance? Here’s what you need to know

Best practices to speed up the claim process -

• Fill the claim form appropriately, and double-check the information.
• Submit all the required documents.
• Fully cooperate with the adjuster; be truthful, don’t hide any information.
• Keep copies of all paperwork.
• Choose a reputable repair shop (accredited by the provider).

Total Loss Claim: Common issues faced by policyholders

Let us now discuss the problems Filipino car owners face during a total loss claim -

Disagreement over car valuation: One of the most common issues car owners face with their provider during total-loss claims is valuation. Usually, a car owner feels their car is worth more than the insurer’s valuation.

Tip: It is suggested to check the market price of similar vehicles online.

Delayed claim process: One of the most significant challenges policymakers face is the delay in the claim process. Common reasons for this include - missing documentation, high claim volume, and short staff.

Also Read: Filing car insurance claims in the Philippines: Coverage to consider

How to avoid total loss disputes with your provider

Wanna enjoy a seamless experience after an accident or unfortunate event involving your car? Here are a few tips -

Opt for a reliable insurance provider: It is highly recommended to partner with a well-recognised, reputable provider with a fast claims process and strong customer support. Here, we’d like you to suggest checking providers' ratings on trusted third-party platforms.

Understand your policy: It is highly recommended to read the policy fine print carefully. Check every detail bit by bit, including policy inclusions, exclusions, and the claim process.

Bottom line

Every car owner and policyholder in the country needs to understand total loss coverage to make wise decisions and protect against unexpected financial losses. Furthermore, with the proper knowledge and a reliable provider by your side, handling a total loss situation or a significant accident/collision is less stressful and more manageable. Here are a few suggestions for Filipino drivers -

• Keep your policy updated
• Avoid driving to accident- & flood-prone areas
• Take clear pictures from multiple angles of the damage and surroundings
• Opt for a reputable repair shop

Remember, by staying informed, keeping paperwork & documents ready, and knowing the evaluation process, you’ll be able to tackle even the most complex situation with confidence.

Also Read: Car insurance claim denied? Here’s how to file an appeal in the Philippines