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

Caselet: Mr. Khanna insures his car under a comprehensive motor policy with an IDV of Rs 6,00,000. The car is stolen and never recovered. The policy has no compulsory deductible beyond Rs 1,000 and a valid claim is accepted. Under the standard approach, what is the maximum amount payable, ignoring the Rs 1,000 deductible?

The maximum payable is the IDV of Rs 6,00,000, before deductibles. In a total loss or unrecovered theft, a comprehensive motor policy settles on the Insured Declared Value agreed at inception, not on the original price, and depreciation is not added on top.

  1. ARs 6,00,000, being the IDVCorrect
  2. BRs 6,00,000 plus depreciation
  3. CThe original showroom price regardless of IDV
  4. DOnly the third-party liability amount

Explanation

In a total loss or theft, the claim is settled on the Insured Declared Value, which is the agreed market value at inception, less applicable deductibles. Depreciation is not added, the showroom price is irrelevant if IDV is lower, and third-party liability covers others' losses, not the car itself.

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