Flood affected car: Insurance company wants me to sign an affidavit

What I find unethical is that the insurance company wants me to give an affidavit stating that I have found the buyer at XXX price and then Y will pay the balance of the IDV and also basically absolve them of all responsibilities.

BHPian Balboa recently shared this with other enthusiasts.

Need urgent advice. My car, Honda City, got submerged in my apartment complex during the rains on September 4th in Bangalore.

It's more than 50 days since the incident but there has been no tangible progress. From what I gather, such rain affected cars where the estimate is more than the IDV, the insurance companies through their network have the cars listed on the car trader's website auction. It then goes to the highest bidder. What I find unethical is that the insurance, let's say Y for now company (withholding the name for now) wants me to give an affidavit stating that I have found the buyer at XXX price and then Y will pay the balance of the IDV and also basically absolve them of all responsibilities. I found this strange as I have had no contact with the buyer. I was assured that it's the industry practice and everyone does the same. Was also given to understand that the buyer would salvage the parts.

After 2 false starts, status quo remains and the buyer who was supposed to buy backed out and said that the dealer workshop where I had the car towed is insisting that as per Honda's instruction, it is recorded that the car is flood affected. I do not find anything wrong in this.

I did not get the car repaired outside at a much lower cost when I could have due to the fear of recurring problems, and I certainly do not feel comfortable that someone coughing up 9 lakhs or so is made to suffer through this devious exercise.

What options are available for me? I have already sent them a mail that I do not wish to give an affidavit anymore stating that I had found a buyer. My only dealing will be the insurance company and they need to either close it from their end or give me in writing as to why the claim will not be honoured. It looks like it will be long drawn affair, have to continue EMI payments for a car that I do not have and I have to pay for the new car as well.

Here's what BHPian vigsom had to say on the matter:

Am sorry to hear of your ordeal this far, and the path ahead until this gets closed. While I have no experience in dealing with insurers on claims such as this, the following thread will help you. Please go through posts by bhpian Shekar.ca and others to get an idea on what to expect going forward.

Link 1

Link 2

Here's what BHPian androdev had to say on the matter:

As long as you mention in the affidavit that you are selling a flood affected car in as-is condition, you are not breaking any law. It’s a common practice for the insurance company to find a buyer of a total loss car and make the buyer pay directly to the customer. Balance payment will be made by the insurance company to match the IDV.

You can probably get a legal opinion to ensure your affidavit is worded carefully to safeguard your interests, and can go ahead with such a settlement.

Here's what BHPian anjan_c2007 had to say on the matter:

It appears that this is becoming a SOP for some insurance companies to engage in such deals to enable the insured to redeem his insurance declared value or IDV. This could also be their SOP for cars etc that are damaged beyond repair and could be salvaged by a third party. This third party gets the chunks of metal and plastic of the remains through auction. And this enables the insurer to get the best value for the car.

There could be other fine print pages in waiting with this affidavit, also required to be signed by you. These need to be read carefully and if necessary shown to your lawyer.

The sentence "that I have found the buyer at XXX price and then Y will pay the balance of the IDV and also basically absolve them of all responsibilities" appears premature as of now, since there is no buyer. Signing on the dotted line for some potential buyer needs caution. These buyers are usually professionals who have a hot line with scrappers and get spares out of the salvaged car for the scrap market. Nothing bad about it, since the City is to be salvaged! But the signing can always be done only and only after your insurance company finds a buyer. Please request the insurance company to allow you to meet the buyer and verify his details. You may check his Adhaar card (original) and get its copy for authentication and record. Also, if he has a visiting card, that's helpful. Only after meeting this person can the affidavit be signed. Affidavits are always signed before a notary (executive magistrate) with all the signatories remaining physically present. Any signatory absenting before the notary, needs to give a "power of attorney" to his trusted person to sign on his behalf. Please follow this procedure and you can explain it fully to your insurance company.

Yes, the Honda dealer's document saying that the car is flood affected will help your insurer to make the car ready for sale and salvage.

And after the process is over, the pending loan amount needs to be foreclosed with the financer.

Last of all, but the most important point is that if the car is to be salvaged, it needs to be deregistered from the RTO records. The insurer needs to provide a document to this effect. This document will be an annexure with the form/application you fill up /write that should be submitted to the RTO for deregistration. And the deregistration will only happen once your loan is foreclosed and the joint ownership made single by following the due process and obtaining a NOC from the financer.

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