Stop selling Total Loss Salvage as Used Cars!!
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The Vehicle owners are being subjected to huge financial losses by the General Insurance companies during claims. And non-cancellation of the RC of vehicles involved in accidents and having suffered extensive damages would leave the vehicle owners vulnerable to future consequences.
A) When a vehicle meets with a serious accident and suffers damages beyond repair(90%damage), i.e. irreparable, the vehicle should be declared as a TOTAL LOSS and when the aggregate cost of retrieval and/or repair of the accident vehicle exceeds 75% of the Insured's Declared value of the vehicle, the vehicle should be declared as CONSTRUCTIVE TOTAL LOSS in terms of the G.R 8 of the India Motor Tariff. In either of the cases, the claim amount to be paid to the Insured(the registered owner of the vehicle) would be the The IDV minus the value of the Wreck alone without the Registration Certificate of the vehicle. The Insurer is required to cancel the Insurance Policy of the said vehicle and intimate the registered owner of the vehicle as well as the concerned Regional Transport Authority(RTO) regarding such cancellation in terms of G.R. 24(A)(d) of the India Motor Tariff. Further, the RC of the vehicle must be cancelled with the RTO and the vehicle salvage must be crushed and disposed of. In the event of theft of a vehicle, after the Police authorities have submitted a report that the vehicle is not traceable, the claim of the vehicle must be settled as a TOTAL LOSS by the Insurer and the RC of the vehicle must be cancelled in terms of the provisions of the MV Act. But, the Insurers obtain the RCs of stolen vehicles from the vehicle owners in violation of the prevailing laws. The Insurers insist that the vehicle owners handover the salvage along with requisite documents and only then that they would release even agreed lower amount. Later on, they would shift the onus of not cancelling the RC to the vehicle owner.
B) In obedience to sections 53, 54 & 55 of the MV Act, the RCs of the such vehicles must be suspended and cancelled by the RTOs.
But, this isn't just happening!! The Insurers are compelling the IRDA approved surveyors to under estimate the vehicle repair cost by applying inapplicable deductions like depreciation, salvage value, compulsory excess, to avoid their liability on TOTAL LOSS/CONSTRUCTIVE TOTAL LOSS. Thereby delaying claims settlement under one pretext or the other and compelling them to accept a lower claim amount under the Heads Net of salvage loss/ Cash loss/Salvage loss not prescribed under any law. The vehicle owners are also forced to give a consent letter/full and final settlement discharge voucher for a lower settlement value well in advance of the actual payment which the Hon'ble Supreme Court has held that such a discharge voucher where there is no discharge of duty to be null and void.
C) The issue was brought to the notice of the IRDA, The General Insurance Council and The Transport Commissioner, Karnataka. But all have been evasive throughout. In all the situations mentioned above, the RC of the vehicle is kept alive along with the vehicle owners signatures on the blank Transfer forms( Form No. 29 & Form No.30). The Insurers sell the salvage along with documents to the salvage buyers who in turn, either repair them with sub-standard/used/refurbished parts and such vehicles improperly repaired in violation of the provisions of the MV Act are unsafe for use in public. The RCs of the such vehicles retained by the Insurers/salvage buyers are used to sell stolen vehicles. The Engine No. and the Chassis No. in the RCs are embossed on stolen vehicles of the similar make and model and they hit the Used car dealerships, too. This is the only reason most of the stolen vehicles especially in Delhi are not traced. Imagine the plight of the gullible buyers of such stolen/accident vehicles. The RTOs give a lame excuse that the Insurers do not intimate them about cancellation of Insurance policies of stolen and TOTAL LOSS vehicles and they are unable to initiate any action against such vehicles. But, an FIR is filed against every such vehicle, either stolen/accident, and an inspection report of the vehicle is given by the jurisdictional Inspector of Motor vehicles. Therefore, the version of the Transport department is not true to believe.
D) The only remedy to this menace would be-
i) that the RTOs must suspend/cancel the RCs of the accident/stolen vehicles.
ii) that the Insurers must intimate the concerned RTO about cancellation of a Motor Insurance Policy along with reasons.
iii) that the vehicle owners be given a free hand to appoint an IRDA approved surveyor unlike the present practice of appointing the surveyors by the Insurers.
iv) that the Insurance Ombudsman act in a fair way to uphold justice.
v) that the information of stolen/accident vehicles be made accessible/available to the general public which would discourage sale of repaired wreck/stolen vehicles.
vi) that necessary amendments be included in the MV Act/The Insurance Act to check and regulate the method of assessment of cost of repair of severely damaged vehicles.
vii) that the Police Dept, The Transport Dept and the Insurers be interconnected to maintain transparency, thereby avoiding such incidents.
viiii) that necessary penal clauses be included in the concerned laws to subject those involved in the activity of avoiding the TOTAL LOSS, failure to cancel the RC
ix) that the IRDA would enforce all applicable provisions of law and work towards the safety of the common man because this is not just the monetary issue, but it also involves many lives at stake.
E) Failure to observe the suggestions referred to above would -
i) encourage sale of repaired wreck about which the buyer would never know.
ii) facilitate misuse of such vehicles in anti-social activities leaving the vehicle owners at the mercy of law.
iii) multiply theft of vehicles and misuse of RCs to sell stolen vehicles as used ones.
iv) the repaired wreck suffering irreparable deformities and which hasn't undergone a road-worthiness check by the concerned Dept would lead to fatal vehicle accidents.
v) add to the already existing alarming levels of pollution owing to the Wreck repaired improperly in contravention of the provisions of the MV Act .
Therefore, a prayer before all concerned to arrest this illegal practice and save the common man from falling prey in the hands of those involved.
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