[maheshm619]

During the floods that swallowed Kerala a few years back, my friend has lost his Hyundai Eon (declared as total loss by the insurance company). Few weeks after the incident , he received a Fastag deduction notification in his phone which said the vehicle had crossed some toll plaza near Pune.

Reading this thread, his story now makes sense.

I was also conned by a used car dealer ,some years ago, operating in Malad near Mumbai. He had sold me a 2006 Swift Vxi. Me being a complete noob at that time, and eager to have a car for an upcoming occasion, fell for that shining car with very less kms in the odometer . The car interior was flawless, the tyres were good, it has CNG fitted & even had roof mounted ICE.

Few weeks into ownership, while washing the car, the metal piece where VIN no: is stamped crumbled like thermo coal , the power windows started acting funny. The CNG kit was asthmatic. Little by little , I discovered that the car was a rust bucket, a victim of Mumbai floods.

Once during a trip to Mahabaleshwar near Pune, I fell victim to the notorious puncture scammers. While jacking up the car, the floorboard cracked . Scoring this double whammy , I decided to get rid of that car.

A few months after, I found a buyer who paid a fair price even after I showed him most of the car's faults. Once in a while his photos pop up in my whatsapp status feed. The car is still alive and the guy seems to have rescued it. The whole ordeal taught me an important lesson, the value of a proper PDI.

[Electromotive]

Ways to identify flood damaged and repaired cars:

Foul smell:
Once water and dirt gets inside the car it will leave a trace. Moldy/salty/ fishy/rusty smell in the cabin when left in the sun and foul smell when running the blower/AC. Also beware if the car smells strongly of perfume. That's the seller's attempt to mask the foul smell.

Rust and dirt on the inside:
Rust on the seat rails and mountings. Rust on screws under the dash and metal fittings.
More obvious rust in the boot/hatch, under the carpet and sharp corners of the door edges and locking mechanism.
Mud or dirt on the backside of pedals. Caked mud on wires under the dash and steering column.
Caked dirt on hard-to-reach places on the inside is generally indicative of the car being in deep water. Check for blockage and rust on internal fuse box, OBD2 and USB sockets.

Dampness:
General dampness in the carpets and seats and whitish fungal growth when car is not used even for a couple of days. Tissue paper left pressed on the seats or carpet will become damp and have a moldy smell.

Water line and mineral deposits:
White-ish waterline from minerals in the engine bay (on the body panels) and on the engine and wiring harness. Also mineral and mud residue on engine mounts, shock absorbers etc.

Fogged up lamps:
If the head and tail lights are fogged up, that's a sure sign of water ingress. All lights getting fogged up is dead giveaway. If lights are not fogged then check for white-ish mineral scale on the inside of the light clusters.

Other common indicators:
Harsh engine noise, mud inside the exhaust pipe, under-body corrosion, failing sensor warnings, frothy engine oil or coolant.

A paint thickness indicator can be used to determine if the vehicle has been repainted.

[Voodooblaster]

I hope the following post clarifies how total loss vehicles wind up in used car markets:

Insurance companies consider a vehicle as total loss if the liability exceeds 75% of IDV.

Liability amount of insurance co is different from repair amount. Liability amount takes into account depreciation (for Normal policies). This is why we should take nil dep policies with maximum add ons

Eg:
IDV = 10 Lacs
Repair Cost = 11 lacs
Depreciation due to age = 4 lacs
Insurance company liability= 7 lacs
As 7 lacs is less than 75% of 10 lacs, it won't be a total loss case

Now consider a total loss case:

Idv = 10 lacs
Repair cost = 12 lacs
Depreciation = 4 lacs
Insurance company liability on repair basis = 8 lacs
Since the repair basis amt exceeds 75% of IDV, the vehicle will be considered as a Total Loss and Ins Co has to reimburse Rs 10 lacs

Normally Ins Co contacts a salvage/scrap buyer and gets value assessed on two parameters:

Case 1) With RC (The vehicle is transferred from customers name to the salvage buyer. They usually repair and resell it)
Case 2) Without RC (Here RC is cancelled and vehicle is not usable anymore)

Insurance company pays the difference between IDV and amount quoted by salvage buyer. The salvage buyer pays the amount quoted to the customer. In effect customer gets IDV.

Obviously insurance company can minimize loss if the claim is settled with RC, as illustrated in Case 1.

But they are not supposed act as per Case 1 always. The regulator IRDAI insists on RC cancellation.

For RC to be cancelled, RTO officials have to physically inspect vehicle. Normally they insist that the part containing chassis number is cut and destroyed.

1st Difficulty: When there is Hypothecation/Loan dues are pending.
When there is hypothecation in RC, insurance amt can be paid to bank only. Insurance can be paid only if RC is cancelled. For RC to be cancelled, hypothecation has to be cancelled first. Bank won't allow hypothecation to be cancelled without the loan amount being made in full.

One option is that customer pays amt in full bank and then gets RC and Hypothecation cancelled ( the process takes at least 4 months in Kerala)

2nd Difficulty: The registered RTO and the place where the damaged vehicle is garaged comes under a different RTO/State. In this case, the Home RTO has to send a letter to the RTO where the vehicle is kept, and the local RTO inspects the vehicle and sends a report to home RTO. Finally home RTO cancels the RC. We all know how Indian RTO's work and how easily it can be done. ()

3rd Difficulty:

When damaged vehicle is in an inaccessible place (at the bottom of a gorge, or lake ). Since this case is not applicable to a flood affected vehicles, i won't elaborate

Only for these 3 difficulties, Ins Co.s are allowed to settle total loss without insisting on RC cancellation (though practically ins co.s regularly flout this)

When hypothecation is pending, not everyone will have enough liquid funds available for 3 to 6 months, to get the loan closed, Rc cancelled and finally get insurance amount.

And the less said about dealing with multiple RTO's, the better. (I am not even going into the multiple state cases)

This is how we find the total loss flood vehicles (who look alright post repair even to trained eyes) in the used car market.

[gururajrv]

This sends chills down my spine! I really pity those customers who falls into the hands of this mafia!

How about new cars stored in stockyard of dealership when it goes underwater? Will dealers contact these mafia to get the car going until it reaches the hands of ill-fated customers?

[Voodooblaster]

Vehicles in dealer yards are insured as stock.

Water ingress per se is not a huge problem, unless and until the vehicle is cranked/driven when inundated and even after water has drained. Since vehicle in yards are unlikely to be cranked, they won't have lasting damage.

Originally Posted by gururajrv

How about new cars stored in stockyard of dealership when it goes underwater?

Professional repairs are carried out mostly at dealer workshops with genuine spares and vehicles are sold, albeit at discounted prices. Models in high demand like Sonet/Seltos/Venue/Creta may even be sold without discounts (with artificially low waiting time)

Insurance pays the repair cost

[Mafia]

This form of practice of reselling damaged or accident vehicles seems to exist everywhere.

The Middle East is particularly in-famous for recycling accident vehicles from USA and other developed countries. Though I do not have first-hand knowledge of the process in the country of origin, I have read, total-loss cars are auctioned off for salvaging. Those cars are restored and sold. Some sellers even show photos of the car after the accident where the airbags have not been deployed.

I am not surprised about flood vehicles being resold at all in India.

One of the used car agencies is pushing the idea of buying used cars online. I can't tell you how offensive I find those ads.

[ketan007]

Thanks for bringing this topic.

A similar situation happened to me. During the 22nd July floods in Chiplun, our two cars were submerged. Now, we have two options:
1. Scrap the car. (insisted by the insurance company)
2. Repair the car with own risk. (You get IDV - Salvage Value)

Now, we decided to scrap one car and repair the other. I got a call from some guy in Mumbai; he was a salvage car buyer. The insurance company arranged this. He openly told me on the call that he would repair my flooded car and then sell it.
I know this is certainly a bad practice, but as an owner, do I have any control over what happens to the car after we scrap it?

[arun_m5]

Originally Posted by Mafia

The Middle East is particularly in-famous for recycling accident vehicles from USA and other developed countries. Though I do not have first-hand knowledge of the process in the country of origin, I have read, total-loss cars are auctioned off for salvaging. Those cars are restored and sold. Some sellers even show photos of the car after the accident where the airbags have not been deployed.

Yes the middle east recycles cars, but there is a fair bit of transparency here. Since most cars are US salvage vehicles, a simple VIN search can give you a comprehensive history of the vehicle, its original mileage, damage pictures etc.

The RTO equivalent in the middle east conducts comprehensive evaluations of these cars before issuing plates (even running ECU diagnostics). You have the freedom to test drive these vehicles before getting them as well.

[NPV]

I'm wondering what stops the Motor vehicle act and the automotive insurance laws to be amended such that when there is a total loss claim awarded, the RTO is automatically notified for de-registration of the vehicle number ? Make this linking part of the Digital India initiative ?

After all, the insurance companies employees like surveyors and the like are using the loopholes to pocket the money here and are fuelling a parallel economy of sorts with such vehicles.

Originally Posted by ketan007

I ​know this is certainly a bad practice, but as an owner, do I have any control over what happens to the car after we scrap it?

Yes, as an owner, when you decide to scrap the car you also need to get your vehicle de-registered by the RTO and apply for Road tax refund if eligible.

Read up on this thread - here (The tale of a Total Loss Claim)

[SulemanP]

In our country anything seems possible just go through the thread below

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

One of our TBHP member's cancelled the RC in the RTO that too after going through a lot of agony and court fighting with the insurance company. End of the day he could still find out that the vehicle was used by someone with a valid insurance on the vehicle...This is like every common man in our country will be taken for a ride if he/she is not aware of proper rules & procedures...what a sad situation one has to go through...

[Rahul Rao]

First of all how many here have read the insurance fine print carefully. Read the clause Total loss / NOS.
You are entitled to 75% of IDV + Salvage value of the car, and not the full value.
If you really want your car to be declared total loss, be happy with the 75% Idv and the tax refund, and also be ready to do some legwork for the process.
Even after the car is declared total loss, the insurance company has rights to the scrap, and in that case spares can be salvaged and sold separately not the entire car.
But if you sign away as NOS and take the full value or anything above 75% you are actually selling your car to a restorer.
If you think this is a fraud, then this would not be written in the fine print, when you knowingly sign away your car you are actually selling it in as is where is condition. To prevent some yelling about and protests from customers the insurance co's started insuring the tax paid too, when you pay for that you actually sign away your right to declare your car as total loss in case of any eventuality.
Now coming to frauds by established resellers, about 4 years ago, a business associate sold a Chevrolet Beat used by his salesmen for traveling all over MH, GA, western MP and North KA, and bought an Dzire VDI. The car had run about 2.5 Lakh km from 2014 to 2017, for some reason the buyer had come back to him for signatures. He asked the buyer how come you are not scared of the high mileage, the buyer replied 96000 is hardly high mileage, and he usually buys new and sells after 2.5-3.0 Lakh km, and he got the car cheap.
Another thing I realized is that the True value and other franchisees take the old struts and other spares which are in good condition, most of us change the pair when one goes bad, the other one is often picked up by the resellers.

Rahul

[Electromotive]

Originally Posted by Rahul Rao

First of all how many here have read the insurance fine print carefully. Read the clause Total loss / NOS.
You are entitled to 75% of IDV + Salvage value of the car, and not the full value.
If you really want your car to be declared total loss, be happy with the 75% Idv and the tax refund, and also be ready to do some legwork for the process.

A lot of people keep missing this point. What many people are calling fraud is part of the fine print.

The real fraud happens when the history of the car is hidden from the mark - aka the unsuspecting customer. What is needed is mandatory reporting of accidents and damage/repairs to a centralized database maintained by a third party - similar to CARFAX but unlike CARFAX, reporting has to be made mandatory by service centers, police and insurance cos.

[Voodooblaster]

Originally Posted by Electromotive

What is needed is mandatory reporting of accidents and damage/repairs to a centralized database maintained by a third party - similar to CARFAX but unlike CARFAX, reporting has to be made mandatory by service centers, police and insurance cos.

All indian Insurance companies submit claims data to IIB

Unfortunately the data is not available to general public as far as i know. Govt could make it a paid service, so that people buying any 2nd hand vehicle can check the claim history.

Many people do repair outside ASS to hide the damage from service history records and obtain a higher resale value

[SulemanP]

Originally Posted by Rahul Rao

First of all how many here have read the insurance fine print carefully. Read the clause Total loss / NOS.
You are entitled to 75% of IDV + Salvage value of the car, and not the full value.
If you really want your car to be declared total loss, be happy with the 75% Idv and the tax refund, and also be ready to do some legwork for the process.

Agree! This is still okay if the car is not in your ownership after procedure is completed else you face the risk of getting dragged in to unnecessary legal issues. No one would like to end up that way...

[goenkakushal]

Originally Posted by Voodooblaster

I hope the following post clarifies how total loss vehicles wind up in used car markets:

Insurance companies consider a vehicle as total loss if the liability exceeds 75% of IDV.

Liability amount of insurance co is different from repair amount. Liability amount takes into account depreciation (for Normal policies). This is why we should take nil dep policies with maximum add ons

As per my knowledge, if repair cost exceeds 75% of the IDV then it is considered Total Loss. It is not dependent on liability of insurance company .

Eg. IDV of vehicle : 10Lacs
Repair estimate :7.6 lacs
Insurance co Liability :6 Lacs

This is a case of total loss as per my understanding.
(Depreciation due to age , what exactly do you mean by that ? IDV is calculated after considering deprecation )
I have illustrated below extract from my policy terms:

"IDV shall be treated as the ‘Market Value’ throughout the policy period without any further depreciation for the purpose of Total Loss
(TL) / Constructive Total Loss (CTL) claims.
The insured vehicle shall be treated as a CTL if the aggregate cost of retrieval and / or repair of the vehicle, subject to terms and
conditions of the policy, exceeds 75% of the IDV of the vehicle."

Please read and share your inference.