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Message: <blockquote data-quote="ozone" data-source="post: 296019" data-attributes="member: 71">There are many comments on why insurance companies do not pay out in full in the event of constructive total loss or theft of a car.Constructive total loss means the car is beyond repair ie it is not worthwhile to repair the car.Insurance is based on the principle of indemnity ie it aims to put a person in the same financial position after a loss as he was in before a loss.Say your car is insured for a period of one year from 1st Jan 2008 to 31st Dec 2008 for RM 100k. Assume the market value on 1st Jan 2008 is RM 100k ( market value is the price which the car will fetch in the open market )If it is stolen on 3rd Jan 2008, your insurance company will probably pay RM 100k. But if the car is stolen on say, 25th Dec 2008, the insurance will pay the market value at the time of loss. Why ? Because the principle of indemnity comes in. If the car was not lost on 25th Dec 2008, the car will not be able to fetch RM 100k in the open market. It will probably fetch about about say, RM 85k and that is the value that the insurance company will offer as settlement.So the car owner is at exactly the same financial position that he would have been in before the loss.Of course the general public can get the wrong perception because :1. there are some insurance companies ( definitely not all insurance companies ! ) who wil try to offer one or two thousand less than actual market value in an effort to control claims cost2. market value is very subjective and is always subject to argument However, nowadays, the motor insurance  in Malaysia has changed a bit. In UK, it is a standard policy condition for some companies that if a new car is stolen or treated as total loss, the insurance company will pay the actual purchase price of the vehicle when new.About 3 years ago, this was first introduced by an insurance company in MY as a supposedly innovation in an effort to differentiate itself from competitors. It was first offered to Nissan and then to Perodua and subsequently other non theft target vehicles.I said "supposedly" because the idea came from the UK policies -why reinvent the wheel .......Soon all insurance companies followed and the agreed value clause for new vehicles has now become common for new cars. This applies only to first year. For second year, it goes back to market value.What are the cars makes that will currently pay you the sum insured is lost within one year from new purchase ?1. Nissan/Renault2. Perodua3. Mercedes Benz ( if purchased from C&C ) This applies onyl for CTL and not for theft as Mercedes is a theft target vehicle. However, if installed with i mob immobiliser, it will apply to theft as well4. Some dealers for Proton, Hyundai, Kia will offer as well5. Jaguar @ Pavillion will offer this soon provided loan and insurance is taken via Affin Bank6. There are others that I cannot recall at the moment.Hope this helps.</blockquote>

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