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Old 8th January 2007, 17:53   #1
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Default Choice of insurance company dictated by lending bank

Hi all, recently when i had been to my bank (Canara Bank) from whom I've taken a loan for the optra, the manager told me that I need to change my car insurance from Royal Sundaram, to United India the next time I'm paying the premium.
The reason he gave me was that all nationalised banks have been given a list of 5 insurance companies with which insurance needs to be taken for vehicles financed by the bank, further out of these five, Canara Bank has been given United India to do business with.
I found this absurd, as I feel choice of insurance companies is my prerogative, next the bank will be telling me as to how many kms I can drive per day or where I can take the car till I clear the loan etc.
Is anybody aware of this rule? Guys with cars financed by nationalised banks may be aware of this.Pls throw some light on this.
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Old 8th January 2007, 18:29   #2
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Is your loan also including Insurance premiums?

Quote:
next the bank will be telling me as to how many kms I can drive per day or where I can take the car
The Insurance premiums might soon do that.

Last edited by rahul_intlad : 8th January 2007 at 18:32.
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Old 8th January 2007, 18:47   #3
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Nope, premium is all mine
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Old 8th January 2007, 19:09   #4
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has he shown you documentation ?
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Old 8th January 2007, 20:32   #5
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To off quote : The lending bank does provide an incentive offer if you choose an alliance insurance- Like TATA Motor Finance and TATA AIG.
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Old 9th January 2007, 11:11   #6
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Brokers / agents must be independent bodies, not engaged in other businesses, otherwise there is always a clash of ethics.
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Old 9th January 2007, 15:59   #7
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If you car gets stolen, its the insurance company which will pay the financing bank. So there is a relation.

Also, it could be a way for the center to garner guaranteed premiums toward their own insurance companies.
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Old 18th January 2007, 11:20   #8
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It seems to be like that the manager may be getting commission for canvasing new customers for United India !!!

Other than this, my head is currently having no other reasons.
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Old 19th January 2007, 00:19   #9
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Heard of this now from a few other people as well,finance guys please help?
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Old 12th February 2007, 07:37   #10
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The financing bank will try to convince you to go for a particular insurer telling that you took the loan from them so you better take their advice. Why just the bank, ever the showroom that sold you the car will tell you to go for a particular insurer, saying that they sold you the car, and you will bring the car to them again for servicing, so you better take their advice.

But the fact is, neither the bank nor the car seller has a locus standi on the issue. It is the vehicle owner who pays for the insurance from his pocket. So it is entirely the vehicle owners discretion. And he shoulduse his discretion wisely.
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Old 12th February 2007, 18:02   #11
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Since the due date for renewing my car insurance is approaching and my dilemma about why i was asked to go in for united india was not resolved, i started checking on various options and found that pvt insurance cos. like royal sundaram and tata aig are giving discounts over and above the NCB, diff between the two was about 1.8k.
Meanwhile not wanting to accuse my bank manager about underhand dealings without substance, I called up the bank's customer care number and was transferred to two depts. before a lady senior manager spoke to me and confirmed that indeed there was an instruction from the bank's HO to ensure that vehicles financed by the bank need to take insurance from united India as they have entered into a tie up, according to her this was not to inconvenience the customer but in fact it was to have a single window solution to the customer's needs.
I argued telling her that I was getting a better deal from my existing insurance co., she agreed that the bank cannot force me, but asked me to send her a mail stating the facts and requesting that the instruction from HO be reversed, according to her, the policies to help customers sometimes had an adverse effect and this could be one such example.
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Old 12th February 2007, 18:27   #12
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I think you can approach the Banking ombudsman.. Banks cannot force their car loan customers to go for an United India insurance, just because they have a tie up.

Where will it end then?? I mean they can force other products on to you.. say credit cards etc.
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