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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Non-Life Insurance Products

Caselet: Arvind owns a car with an insured declared value (IDV) of ₹6,00,000 and has comprehensive motor cover. The car is stolen and never recovered. Which amount is the insurer's maximum liability for the total loss, ignoring any deductible and assuming the policy conditions are met?

The insurer's maximum liability is the insured declared value of ₹6,00,000. IDV is the agreed depreciated market value of the vehicle, and it is the basis for settling total loss or unrecovered theft claims, not the showroom price or a new car cost.

  1. AThe IDV of ₹6,00,000Correct
  2. BThe original showroom price of the car
  3. CThe IDV plus the next year's premium
  4. DThe cost of a new car of the same model

Explanation

In a total loss or theft of an unrecovered vehicle, the insurer pays the IDV, which is the agreed market value at policy inception adjusted for depreciation. The original price and new car cost are not the basis, and premium is not added to a claim.

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