Wednesday, January 07, 2009

Constructive total loss of vehicle

Dear Mr Tan,

I bought a comprehensive motor insurance on my vehicle. Unfortunately, I met an accident and the the insurance company informed me that they are only willing to pay me based on the OMV of my car (PARF and COE $28,800/-) value plus cash of $1,000/- ( approx $30,000/-). My vehicle is coming to 5 years old, the cost of repair is estimated to be around $15,000/-.

They claim that it is no longer economical to repair the car. May I know my position in this situation.
REPLY
Under the insurance policy contract, the insurance company has the option to pay the current market value of the vehicle, instead of repairing it. This is called a "constructive total loss".

Usually, if you get the current market value, you will be able to buy a vehicle of similar age and condition as your insured vehicle. If you find that it is not possible to get a replacement vehicle, you can discuss with the insurance company to find a better solution.
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7 comments:

nhyone said...

The so-called comprehensive insurance is far from comprehensive.

January 07, 2009 9:21 PM
Unknown said...

"The so-called comprehensive insurance is far from comprehensive."


I think, like many investors, you could have misread.


The so-called comprehensive insurance IS indeed comprehensive.

The Premiums are comprehensive.

January 08, 2009 12:49 PM
Anonymous said...

comprehensive is a technical definition? As compared to to 3rd party insurance?

January 08, 2009 2:04 PM
Anonymous said...

Correct me if wrong, but the insurer is actually paying out only $1000 in this case, since the parf and coe rebate comes from the LTA when the car is scrapped. Might as well buy a 3rd party coverage.

January 08, 2009 9:12 PM
Anonymous said...

that's right. The insurance company is only paying out $1k.

Without knowing more details of what kind of accident happened, can't comment on why so little is paid out.

January 17, 2009 10:40 PM
kk said...

Mr. Tan,

For a car which chassis has been extensively damaged and has to be scrapped re LTA regulations ( http://www.onemotoring.com.sg/publish/onemotoring/en/lta_information_guidelines/modifications_and_veh), does the constructive total loss amount offered by the insurer include the PARF/COE rebate due to the owner? Thanks.

May 13, 2015 5:03 PM
Tan Kin Lian said...

The insurer pays to you the net amount, excluding COE/PARF.

You can claim the COE/PARF directly from LTA.

May 19, 2015 12:00 PM

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