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Old 4th April 2012, 19:27   #1
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Default Insurance Claims - What a Con!

Hello All,

This latest realization is something I experienced while taking an accidental claim on my XUV from SBI GI, which I though I shall share with everyone on T-BHP. Not sure if others are aware of this, but I am sure many would be hearing about this for the first time.

I recently went for an insurance claim on my XUV, at a M&M workshop, which was not registered with my Insurance Company (SBI) as a cashless garage, as a result I had to put in a request at SBI and be involved in some hand holding to start this relationship between SBI and the particular M&M workshop, which exposed me to this insurance system which I would not have thought existed.

I have been driving for ages now. Since last 3 years, I have been taking 0%Dep policies on all my cars and have made it a habit to keep the cars in best shape possible. As a result over the last three years I have had an experience of taking more than 5 claims on my cars, using different Insurance Companies and workshops, and have thus always wondered how are Insurance Companies making money off me? Although my insurance premiums even with decreasing IDVs keeps on escalating every year

Well coming to the incident now.. enter scene with Myself, the Workshop GM and the SBI Surveyor with the car at the workshop and the following discussion happened. The game is mainly on labour jobs, which most workshops will have 2 different quotes for each paint jobs, one for the customer (like you and me) and one for the Insurance Companies (for claim repairs).

In my case, the bonnet, front bumper, rear bumper and left fender needed little denting and repainting, and before going for the insurance claim I had inquired the cost of repainting a panel and I was quoted roughly 10-12k. Which given the size of most panels seemed a little steep but OK, as MSIL charges roughly 4-6k for each panel.

Now the conversation that followed, during most of the conversation I decided to silently observe first:
The Surveyor asked for the quote for panel repainting the GM said 4.5-6k,
Surveyor: "OK 4.5 for which and 6 for which?"
GM: "these are our rates depending upon our arrangement with the insurance company and the surveyor"
Surveyor: "GM sahab hamare liye kya karoge, pehli gaadi karwa rahe hain aapse"
GM: "4.5k aapke liye, final rate"
(at this point I was shocked that already the insurance company rate is less than 50% of customer rates, I kept quite)
Surveyor: "OK, let me get back"

Surveyor, pulls me to a side, tells me that they are asking too much, he has already got a quote from SBI registered workshop saying 3.5-4k. He requested me to let him take the car to that workshop, as SBI would not pay more than that.

Me: " sir yeh mere se to 10k maang rahe the, aapko yeh zyada lag raha hai??"
Surveyor: (calls up the other workshop puts the phone on speaker and let me listen in the confirmation of 3.5 - 4k) Then tells me, he is just coming from the Porsche showroom next door, where he has just approved a claim and they are charging..

..5,000 for one panel!! (at this time I almost was abt to laugh on his face, before he dials again, puts on speaker and there was the confirmation, then he also showed me the pic on his camera)

Now, I am confused and furious at the same time. Confused, on what to tell him on the decision on my claim and furious and frustrated for the countless times I must have thought that Insurance Company paid a bomb for the repairs, but when they wouldn't have. I was also thinking in non-0% dep policies, was I paying almost the entire bill (in the veil of Customer rates and depreciation calculated on that?? )

Well coming back to the point, I quickly told the surveyor that I am not taking my car to any other workshop and that he can haggle all he wants with the GM and fix up a rate. He tries to convince me otherwise, but I was already feeling like a Fool and refused to budge. He then negotiated the final rate at 4k a panel.

Post sorting out my claim, I came back and started thinking that for the poor Porsche Cayenne owner, who would have thought his bill was many thousands of rupees, the best decision would be to take a claim. And in the process sacrifice his NCB and some Premium discounts for next year, but in reality the insurance company actually makes money off him by paying only 5k for the work and pocketing the increased premium next year!! I am sure if the workshop will offer the repaint in 5-10k to a Porsche owner, he would have not even given it a second thought before agreeing.

So in short, this is how Insurance Companies in partnering with the Workshops make money off the unsuspecting poor customers like us.

Since then I did some research, and spoke to a couple of workshop owner friends, to realize its a common practice.

I may be wrong, but please do write in if you are aware of this unscrupulous CON.

I will write in another post soon, of a case of a write-off of a 2 weeks old XUV, which was at the same workshop, again because of the workings of this system between the Workshops and the Insurance Companies.

Guys please be aware of this now every time you make a claim, there may be a way to negotiate your rates and avoid these small claims totally.

Mods: Please move to an existing thread, if there is one. I checked couldn't find any.

Last edited by GTO : 6th April 2012 at 13:50. Reason: We do NOT permit content on rash driving on
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Old 4th April 2012, 19:45   #2
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Default Re: Insurance Claims - What a Con!

Let me understand this: If I were to get a panel painted and claim insurance for it, the charges are Rs. 4000/-, but if I were to get it painted and pay for it myself the charges are Rs. 8000/- (I am making an assumption). So out of the 4k, the insurance company pays some share and I pay my share and all's fine. If I am not claiming then I pay double the price. Is this correct?

I won't be surprised if the insurance sector has led to creation of more scams in the world, going by what we see in the health insurance sector. Maybe we are just discovering the tip of the iceberg here.
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Old 4th April 2012, 19:55   #3
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Default Re: Insurance Claims - What a Con!

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Last edited by GTO : 5th April 2012 at 16:03.
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Old 4th April 2012, 20:20   #4
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Default Re: Insurance Claims - What a Con!

Thanks for the valuable 'inside' view of Vehicle Insurance claims. I think now I'm beginning to understand their game plan. As you said, I also wondered how they make a profit out of vehicle insurance. Apart from the claims, the insurance company also has to run their office, staff infrastructures, advts etc.

Going by this, the workshop owners should be naturally inclined to push customers for not going to claims, as they would get a good margin. May be we should bargain at service just as we do while buying a vehicle?
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Old 4th April 2012, 21:15   #5
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I am sorry but am confused with the rates you have quoted. I would have paid anywhere between Rs 2,500 to 4,000 per panel under both the scenarios ie insurance repairs and self repairs. This is for cars like City and Innova.

In my experience, the rates were padded up till it was the domain of largely PSUs. After the entry of private sector insurance companies, they seem to have negotiated a hard bargain and brought down the rates. But to make a point, I would have never paid 8 to 10 K for single panel.
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Old 4th April 2012, 23:45   #6
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Default Re: Insurance Claims - What a Con!

Unless an accident requires changing of multiple parts, I usually avoid the insurance claim altogether.

For usual denting + painting, find a good independent body shop and get your denting/painting done there. Remember, the
cost for painting is moreorless the same for a Indigo door or a BMW door, provided they are the same size.

I have seen a TATA AIG surveyor haggle with a Honda S.A. It was crazy. The official price for painting a panel was say 7 k. The surveyor starting the bargaining by offering 2.5 k.

Last edited by AbhiJ : 4th April 2012 at 23:51.
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Old 5th April 2012, 00:19   #7
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Default Re: Insurance Claims - What a Con!

Can you really call it a scam? It is more of a case of wholesale vs retail logic. The insurance company has to deal with the Auto maker for hundreds of cars every day and so a lower rate for them can be given. The same would not be extended to a customer. I don't see the wrong in this case.
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Old 5th April 2012, 00:53   #8
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Default Re: Insurance Claims - What a Con!

I had a somewhat opposite experience of what the OP had. In my case of 4 day old Activa suffering frontal crash, the SA straightaway asked if I am going to make insurance claim. When I asked why he said the cost will vary. If I make payment from my own, total damage will be 3-3.5k, otherwise its 5k billed to insurance, out of which I need to pay 800 rupees. I did not do anymore calculation and went for insurance claim.
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Old 5th April 2012, 04:20   #9
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Default Re: Insurance Claims - What a Con!


Thanks for bringing the valuable points of scams in insurance sector. I always used to wonder how Insurance can really make profit if the claim rates are high and within few years they should have ran out of business if their claims were to be true.

So this gives in indication that there are two version of the bills/expenses maintained by such insurance companies... one for the customer and charging him/her in their next premium renewals and the second/hidden version for their actual calculation of the expenses and showing up the same in the profit sheets!!!!

IMHO, Unless there are too many replacements/repairs in the accident, it feels claiming insurance may not be worth the money and effort.

whereas in US, negotiating in the workshop for accident repairs is a very common thing. I know an instance where one of my friend got his accident repair done (denting and painting of bumper and fender). The insurance claim was $1200 and he got back $400 from the workshop for getting the work done there!!!!


Last edited by ravikn : 5th April 2012 at 04:28. Reason: added an example!
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Old 5th April 2012, 07:56   #10
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Default Re: Insurance Claims - What a Con!


This is exactly the reverse of what I had experienced with my earlier Santro. The quote given by the workshop for repairs to me was lesser than the quote given when the Insurance co is involved. The reason being - workshop gets ready cash if I were to pay directly from my pocket, if it were through the Insurance the hassles are many and above that the payment is delayed. Hence the workshop inflates the bill when claimed through Insurance. Very much similar trend observed in the health insurance claims.

Also you claims of being a rash driver and very used to Insurance claims is not inspirational too, would request to word your thoughts a bit more carefully. BHP forum does not encourage rash driving. Please drive safely.
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Old 5th April 2012, 09:09   #11
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Default Re: Insurance Claims - What a Con!

That's the way "organised" sector works.

Insurance consortium has fixed slab amounts for each of the work depending on the workshop. The labour is also fixed based on the place it is, rental value, size etc etc.

So, service center cannot ask what they ask to customer directly. Remember, a customer is just a "common" man who is not well informed of the cost etc.

This is reverse in case of Medical claims. They charge more to insurance people than they do to you and me

This is not applicable to Motor insurance, because, if they charge more, they will end up reaching the 75% IDV and most cars will be totaled off in their service!!!
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Old 5th April 2012, 10:17   #12
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Default Re: Insurance Claims - What a Con!

Very interesting finding. Thanks for sharing.
As couple of people have mentioned, others have experienced the exact opposite as well. And both scenarios can be explained logically.

Here are my views:
1. Its logical for the workshop to offer better (competitive) rates to a Insurance company (as compared to an individual car-owner) because of volumes.
2. In that case, the workshop is making lower margins per transaction when they deal with a workshop as against a individual car-owner. So its logical for the workshop to recommend "don't lose your NCB. Get the work done yourself". I have experienced this myself.
3. For the workshop, to improve their margins for the transactions with a insurance company, the possibility of 'collaboration' with the surveyor exists. Include a few more line-items in the bill to the insurance-company and 'reimburse' the surveyor for his help and support.

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.
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Old 5th April 2012, 10:42   #13
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Default Re: Insurance Claims - What a Con!

Not sure about Auto Insurance on medical insurance this used to happen the other way around. Hospitals used to charge more if Insurance is going to pay the bill vis-a-vis an individual paying the bill. Its high time there needs to be some sort of regulation that mandates the charges need to be same irrespective of where the money is coming from.

I agree this seems like a day light robbery by Dealers. Insurers will always to lower their outgo and will always favor a lower charge for themselves.
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Old 5th April 2012, 10:44   #14
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Default Re: Insurance Claims - What a Con!

But when we make a claim and get things fixed, we do get a proper bill out of which we'd pay our share and the rest is paid by the insurance company. Basically what you are saying is that this bill would be much more if there was no insurance company involved right?
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Old 5th April 2012, 11:51   #15
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Default Re: Insurance Claims - What a Con!

Originally Posted by kalpeshc View Post
But when we make a claim and get things fixed, we do get a proper bill out of which we'd pay our share and the rest is paid by the insurance company. Basically what you are saying is that this bill would be much more if there was no insurance company involved right?
If the split between you and the insurance company was to be 40-60, and you paid 4k against a bill of 10k, the insurance company is expected to pay 6k. However you never get to know how much they actually paid. They might have paid only 1k and the actual cost of the repairs was 5k. So you are actually footing the entire bill since you never know if the insurance company was charged as per your bill and they paid up their share.
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