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Old 5th April 2012, 12:05   #16
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Default Re: Insurance Claims - What a Con!

One more reason why 0% depreciation plans are the way to go !
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Old 5th April 2012, 12:56   #17
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Default Re: Insurance Claims - What a Con!

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Originally Posted by SDP View Post
@AGwagon,

For me, the key takeaway from this is, conceptually you can negotiate with the workshop for lower charges for anything that you get done from them. Although they can show you the official rates, now we know that even with half the rates, they still make money.
They often don't actually. I have worked with some organized garages and when we analyzed last year's performance we realized that they had made a net loss of ~10% on the insurance business.

Many organized chains are bleeding money on insurance jobs.

Why do they still do insurance work?

The answer is volumes. Today, anywhere between 60% to 80% (depending on garage) is insurance driven. Now, organized garages use sophisticated equipment that is expensive -- a simple hydraulic bench press of decent quality costs ~5L or more. They will just die if such equipment is idle.

These garages also have a corporate overhead structure. So basically they look at insurance jobs at variable cost + basis, and look to make money from suckers like you and me.

Even this is not sustainable. Especially as insurance companies often delay payments by a couple of months.

A lot of garages have been consciously trying to reduce their insurance volume (reminding you of NCB etc.). Others have been trying to raise their rates with insurance companies. But insurance companies keep supporting newer garages that drive down the price further. So it is all about running hard to stand still.

If you know any garage owner / CEO well -- check it out. Chances are that he will not make money unless he has >90% capacity utilization. So it is probably not as if they are minting money by fleecing us.

But yes, we have every right to feel enraged by the duplicity in pricing.
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Old 5th April 2012, 13:40   #18
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Default Re: Insurance Claims - What a Con!

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Originally Posted by chinkara View Post
They often don't actually. I have worked with some organized garages and when we analyzed last year's performance we realized that they had made a net loss of ~10% on the insurance business.

Many organized chains are bleeding money on insurance jobs.

Why do they still do insurance work?

The answer is volumes. Today, anywhere between 60% to 80% (depending on garage) is insurance driven. Now, organized garages use sophisticated equipment that is expensive -- a simple hydraulic bench press of decent quality costs ~5L or more. They will just die if such equipment is idle.
....
Chinkara, that's a very informative post. Thanks a lot!
Want to ask a question about the portion in bold, to get better understanding.

The workshops take on negative magin business just to operate at near-full capacity? Would the cost for any additional maintenance of the equipment (caused by low capacity utilization) be more than the money they lose with the insurance business?
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Old 5th April 2012, 13:58   #19
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Default Re: Insurance Claims - What a Con!

Well, my experience was quite opposite. I guess workshops prefer insurance companies because they are ready to pay higher amounts with the works shown inflated than the regular work required (just as in the case of health insurance).

How insurance companies earn: not everyone scratches their loved car ever year and small scratches or dents are often ignored. On top of that, insurance companies increases the premium amount on claiming.

regards
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Old 5th April 2012, 14:56   #20
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I agree with the some of you, that Insurance Companies are giving a bulk business to these workshops, but the rate differential is just daylight robbery.

I do not suppose all the Luxo Batch car workshops asking for a small quote for a repaint job, and do not suppose, the workshop will even haggle or discount a quote given to customer, but them charging less than 10k to the insurance companies is something I feel is not fair.

Well moving to the case about which I was talking. This is a new XUV barely 3 weeks old, which rammed into a vacant police booth, as the driver accidentally went on the accelerator rather than the brakes.

The pictures might seem that the damage is too heavy, but seeing it in flesh the damage I do not think was something which will write-off a new vehicle.

The XUV is with the workshop since more than 2 months now, as the owner is not ready for a settlement of complete write-off, as he is loosing the registration, taxes and the premium he had paid for the car. The insurance is also a non-0% dep policy so he might get an amount less than the IDV.

Imagine, again if the Insurance Company agrees to pay for the repair, which they will eventually negotiate with the workshop (as a manager in the workshop tells me). The gentleman who owns the vehicle only pays the depreciation differential (cant imagine it bee too much on a brand new vehicle), whereas in the write-off case the insurance company will still shell out a similar repair bill (they might even negotiate this even further with the workshop) and get the car, which they then with the help of the dealership and the workshop will sell as a second hand car.

As there is a huge premium already (close to 100k) and also the prices have gone up from the first launch (W6 nearly 80k differential in OTR Delhi), the insurance company may stand to be better off only in case of a write-off, at the cost of the customer of course.

I think the individual is using his connections to get the insurance company to pay for the repairs rather than a write-off and thus the car sits in the workshop in a derelict state.

Any thoughts? Is it just me who thinks the car is not as bad as a write-off should be?
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Old 5th April 2012, 16:10   #21
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Default Re: Insurance Claims - What a Con!

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Originally Posted by AGwagon View Post
The pictures might seem that the damage is too heavy, but seeing it in flesh the damage I do not think was something which will write-off a new vehicle.

The XUV is with the workshop since more than 2 months now, as the owner is not ready for a settlement of complete write-off, as he is loosing the registration, taxes and the premium he had paid for the car. The insurance is also a non-0% dep policy so he might get an amount less than the IDV.

Imagine, again if the Insurance Company agrees to pay for the repair, which they will eventually negotiate with the workshop (as a manager in the workshop tells me). The gentleman who owns the vehicle only pays the depreciation differential (cant imagine it bee too much on a brand new vehicle), whereas in the write-off case the insurance company will still shell out a similar repair bill (they might even negotiate this even further with the workshop) and get the car, which they then with the help of the dealership and the workshop will sell as a second hand car.

As there is a huge premium already (close to 100k) and also the prices have gone up from the first launch (W6 nearly 80k differential in OTR Delhi), the insurance company may stand to be better off only in case of a write-off, at the cost of the customer of course.

I think the individual is using his connections to get the insurance company to pay for the repairs rather than a write-off and thus the car sits in the workshop in a derelict state.

Any thoughts? Is it just me who thinks the car is not as bad as a write-off should be?
There are two things to check in the car before you get it repaired. How bad is the chassis damage. If Insurance is claimed, what will the cost to the person be.

With chassis damage it will need replacement and not repair, of the damaged part/s. Otherwise the car will never handle the same.

The reason I ask about the cost to be paid by the individual is that you need to consider the cost of further depreciation because of the accident at time of sale. If this and the cost of repairs adds up to more than the differential to buy a new car, it is better to bite the bullet and pay the difference now.

From the photos, the car can definitely be repaired, though I do worry about chassis damage.
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Old 5th April 2012, 16:25   #22
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Default Re: Insurance Claims - What a Con!

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Originally Posted by pganapathy View Post

The reason I ask about the cost to be paid by the individual is that you need to consider the cost of further depreciation because of the accident at time of sale. If this and the cost of repairs adds up to more than the differential to buy a new car, it is better to bite the bullet and pay the difference now.

From the photos, the car can definitely be repaired, though I do worry about chassis damage.

Pganapathy, this being a Monocoque construction, the repairs or parts of chassis frame replacement will need to be done, which may not be too cheap. However looking at the car, I do not think it was that severe in this case.

Also now a days with these parts generally replaced, the depreciation or loss of value on account of previous accidents is in not great, as long as the repair job was good. So I do not believe as long as he is getting the work done from a M&M Workshop, he needs to worry too much about too high lost value.

IMHO after repairing this vehicle probably this will still sell at close to 90% of the OTR value it was purchased at, on account of the premiums going on XUV and the price hike, which for a prospective buyer will translate into at least a saving of 2.5-3L.
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Old 5th April 2012, 16:38   #23
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Default Re: Insurance Claims - What a Con!

Not sure if I got the whole context right here, but, from my experience, the surveyor can actually benefit the customer (in reducing the burden that is) if you know how to handle one! There was once a instance where I spoke to the surveyor (when one of friends wanted to get his Getz fixed for a rear shunt)
of a insurance company and asked him to include some minor touch work (read that as side skirt painting) in the actual claim which otherwise would no have been included. Also, the insurance amount is based on the estimate provided by the workshop and any variation in the amount provided versus amount paid is pretty clear on the spot and (again) if you really know the guy, you can actually pull over a decent deal!
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Old 5th April 2012, 17:28   #24
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Default Re: Insurance Claims - What a Con!

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Originally Posted by chinkara View Post
Many organized chains are bleeding money on insurance jobs.
Have a question, wouldn't the organized garages pay some sort of taxes and for taxes to be paid the billing needs to be in order. They do produce a bill for customers to show total cost of repairs and what percentage is coming from Insurance and pay service tax accordingly on the total amount (and maybe more taxes).

The tax payable would look incorrect if they are having different rates for Insurance folks which is below the value billed, so in short there is no documentation of the actual money received for the bill.
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Old 5th April 2012, 20:56   #25
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Default Re: Insurance Claims - What a Con!

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Any thoughts?
Considering Mahindra A.S.S and their inexperience in handling/repairing XUV, which is a new launch, I would definitely ASK for a total loss, if I were ever to live with this vehicle.

Again, from the owners perspective, as XUV is in great demand, and the lottery selection of owners, he might be planning to repair it, and sell it off to an unsuspecting customer at a premium. I have seen months old Swift's selling for more than the On-Road price.

----------------------------

Coming to the topic, body shop bills can always be negotiated. Down here, the opposite happens. Workshop guys charge a premium, and keep the change, when its the insurance companies that almost always pays up a bit too much for the repairs.
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Old 6th April 2012, 00:59   #26
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Default Re: Insurance Claims - What a Con!

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The insurance is also a non-0% dep policy so he might get an amount less than the IDV.
Customer is always entitled to IDV. There are threads on this forum on instances where customer received complete IDV in case of Total Loss.

Part of the money would be paid by insurance company and rest of it would be paid by buyer of the damaged vehicle.
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Old 6th April 2012, 08:43   #27
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Default Re: Insurance Claims - What a Con!

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Originally Posted by mayankjha1806 View Post
Have a question, wouldn't the organized garages pay some sort of taxes and for taxes to be paid the billing needs to be in order. They do produce a bill for customers to show total cost of repairs and what percentage is coming from Insurance and pay service tax accordingly on the total amount (and maybe more taxes).

The tax payable would look incorrect if they are having different rates for Insurance folks which is below the value billed, so in short there is no documentation of the actual money received for the bill.
For insurance cos, it is shown as discount -- 50% discount in some cases.
Quote:
Originally Posted by joshuthomas View Post
Well, my experience was quite opposite. I guess workshops prefer insurance companies because they are ready to pay higher amounts with the works shown inflated than the regular work required (just as in the case of health insurance).

How insurance companies earn: not everyone scratches their loved car ever year and small scratches or dents are often ignored. On top of that, insurance companies increases the premium amount on claiming.

regards
Josh
This happens only in case of PSU insurance cos and a nexus between garage and surveyor.

Last edited by chinkara : 6th April 2012 at 08:50. Reason: Adding Content
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Old 6th April 2012, 08:49   #28
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Default Re: Insurance Claims - What a Con!

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Chinkara, that's a very informative post. Thanks a lot!
Want to ask a question about the portion in bold, to get better understanding.

The workshops take on negative magin business just to operate at near-full capacity? Would the cost for any additional maintenance of the equipment (caused by low capacity utilization) be more than the money they lose with the insurance business?
Sorry for the delayed reply. Negative margin in the overall sense, but above variable cost. SO that the insurance business contributes some amount, however marginal, towards the fixed cost.
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Old 6th April 2012, 14:17   #29
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Default Re: Insurance Claims - What a Con!

Guys, a little here, if you will see the pictures you can see the cracked windscreen near the passenger side. when I asked what was the cause of this damage as I couldn't see any damage near the windscreen the GM told me that, this was caused due to the driver's mobile which was on the passenger seat and at the time of impact flew to the windscreen breaking it.

One can only imaging the speed at which he was traveling and what would have been a case if he was not wearing a seatbelt. Although since the passenger side airbag was also open, I am not sure if there was no passenger. Any ideas?


Regarding the billing system as Chinkara says, the bill is done again to the insurance company with the discount. I have spoken to a friend who owns a MS authorized garage, he confirmed the case. Although he said that he doesn't do it.

Very recently I managed to rear-end my Dzire to a Innova, as the idiot suddenly stopped with no lights trying to hop the central divider to make a J-turn, anyways, without ABS my breaks locked and I skidded a good 2 meters before rear-ending, since he had one of those rear bull gaurds, there was little damage to him, but my Dzire took quite a knock. I would say almost as bad as this XUV. But i got everything done as a claim, since the MS workshop is owned by my friend, and I paid just the zero access of Rs500, the towing charges were also paid for by the company. He also got my my rear-bumper in the claim twisting the story a bit.

I guess what I am trying to say is, that the XUV was no way near a write-off, I understand the skepticism with the M&M A.S.S as they are still learning their war around the XUV and that you would always have this thought lingering in the back of your head, but I do think you can fix most accidents today and replace the parts which you are not supposed to repair. You can see there are numerous shows on Discovery Turbo, where they pick up these Insurance Write-offs mainly in the UK, repair it properly and then sell for a decent margin.

Just making a point of my observations, no offense.
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Old 6th April 2012, 15:15   #30
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Default Re: Insurance Claims - What a Con!

In one of my friend's case some time back, his Hyundai was rammed into by from behind by another vehicle. When he went to the hyundai dealership and said he was going to claim insurance, he was quoted 38000 for repairs. When the surveyor came, the negotiation happened and the total claim amount was brought down to 23000, since it was not cashless and needed to be reimbursed. My friend paid the amount and claimed from the insurance company, who in turn reimbursed him 16000.. Net result, Insurance company saves 38000-16000= 12000. Workshop may have still made a marginal profit. Customer spends only Rs.7000 from a potential claim of Rs.38000. So everyone is happy.
The above was related to Automibile insurance. When it came to claiming my mom's hospitalisation through cashless Mediclaim, the hospital quoted lower rates for ICU if it is through insurance and higher for personal payment, since Insurance rates are already negotiated. Can you beat that?
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