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

Caselet: Mr. Iyer's car, insured declared value (IDV) Rs 6,00,000, is stolen and never recovered. The policy carries no applicable deductions other than a compulsory deductible of Rs 1,000, which does not apply to total loss in this case. He has a valid policy and complied with all conditions. Which statement about the settlement is most accurate?

Settlement is generally on a total loss basis up to the insured declared value of Rs 6,00,000, subject to policy terms and conditions. Repair cost does not apply to an unrecovered stolen vehicle, and third-party cover does not compensate own vehicle loss.

  1. ASettlement is generally on a total loss/theft basis up to the IDV, subject to policy termsCorrect
  2. BInsurer pays only the depreciated repair cost
  3. CInsurer pays the market price plus 20% solatium irrespective of IDV
  4. DInsurer pays only the third-party liability amount

Explanation

For a non-recovered theft, the own damage section settles as a total loss, with the IDV as the ceiling, subject to policy terms. Repair costs are irrelevant, there is no fixed solatium, and third-party cover does not compensate loss of own vehicle.

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