[vinair]

Came across this article on a news website. Insurance companies are now teaming up with scrap dealers to restore flood affected vehicles and sell it off to unsuspecting buyers in the second hand car market!

Insurance companies, in their desperation to offset their losses, are throwing ethics and caution to the winds while settling flood-related vehicle claims Instead of turning vehicles that have been damaged beyond repair into scrap, they are putting them up for auction to the delight of the second-hand car mafia. The result: a flood of substandard second hand cars, which could betray unsuspecting new owners any moment, would soon hit the Kerala market

A thing particularly caught my attention is this:

“Salvage buyers, big used-car companies in North India, are circling over the flood-affected regions...

Read more at: https://english.manoramaonline.com/b...e-vehicle.html

[arvind71181]

Caveat Emptor should be the keyword for car purchases in Kerala in the next few months. Feel for all the folks who will get one of these vehicles though

[Deep Blue]

That is what the Insurance companies do always to minimize their payout. It is upto the car owners themselves to insist on cancelling the RC or do it themselves. But that is another ordeal in itself.

https://www.team-bhp.com/forum/india...oss-claim.html (The tale of a Total Loss Claim)

The above thread details such an ordeal.

[BigBrad]

This is one BIG mess. I have shared the experience of my friend here (Automobile Insurance Queries? Ask me). Another bhpian is also facing the same situation and there's a discussion going on.

We take insurance so that we get peace of mind in such situations and these companies are hell bent on making sure we don't. What an irony!

One of my neighbor who is a senior manager at a PSU insurance co told me that they have been instructed to NOT declare any flood affected vehicle as "Total loss". They are told to mark vehicles with high repair estimates as "Salvage loss" and proceed to auction them. The insurance co will also make the owner sign an affidavit which basically promises that the buyer will complete the ownership transfer in a few months time. I'm pretty sure this affidavit will have a no-liability-for-insurance-co clause, so that the risk is entirely upon the owner and the salvage buyer. Now it would have probably been fine if it was a local buyer whom we can trace somehow. But that's not the case here. The buyers are from all over India and these people wouldn't be individual private buyers and they may sell it to someone else, with whom the original owner will have no contact at all. And, since this is like a used car sale, there's no way the original owner can claim road tax refund. I guess the govt too will support these insurers so that there is minimal loss by way of tax refunds.

It's a real nasty situation and I hope IRDA, court or the media takes up this matter and turn things in favor of the poor owners by doing what's mentioned below.

From the article quoted by OP:

Originally Posted by OnManorama

Once total loss is declared, the insurer has to cancel the RC (registration certificate) book, pay the owner the IDV, and make arrangements for the vehicle to be disposed as scrap. (The insurance companies are supposed to sell the scrap through Metal Scrap Trading Corporation, a miniratna PSU under the Ministry of Steel.) This, in insurance lingo, is called the 'constructive total loss' procedure.

[GTO]

I believe Maruti has instituted a system whereby a Kerala flood-damaged car has to be blacklisted in its dealer management system, meaning it cannot be sold as 'new' to any customer. Truly, hats off to such an initiative and I hope all manufacturers follow the same.

When it comes to used cars, just follow all the steps in our best-practices article, especially checking its history. You should be okay.