The Hindu Business Line : Maruti mulls exchange offer for cars damaged in floods

MARUTI Udyog Ltd is considering an exchange offer for cars that were completely damaged in the recent floods in Mumbai. The carmaker is understood to be making this proposal to the insurance companies.

An estimated 6,000 Maruti cars were affected in the floods. Of these, around 800 would fall into the category of fully submerged or completely damaged, said sources.

Mr Mahendra Dhruva, National President of the Institute of Insurance Surveyors, said: "Maruti is considering having an exchange proposal for its damaged cars. The modalities of the exchange will be worked out and proposed to the insurance companies."

As per the exchange offer, if a new Maruti Zen is worth Rs 3.5 lakh currently, but was insured for Rs 2.5 lakh, then a sum close to the insured sum will be given to the car owner. On payment of the difference, the car owner will get a new car.

However, factors such as the age of the car, the condition before the floods, and the insured value will be key in determining the compensations.

Additionally, the surveyor of insurance company will have to certify the damage.

According to surveyors, the condition of most cars would have deteriorated in the past one month due to rusting. The lack of spare parts - particularly electronic parts - infrastructure, and manpower to deal with repairs of this scale has caused car manufacturers such as Maruti to think of alternative solutions. Additionally, production schedules of car manufacturers could be disturbed if they have to make available parts in huge quantities in the wake of the festival season.

Maruti deals mainly with four insurance companies - New India Assurance, National Insurance Company, Bajaj Allianz, and Royal Sundaram Insurance.

It has been holding meetings with these companies to expedite the settlement of claims. Though the insurance claims are settled between car owner and the insurance companies, in this case the manufacturer has stepped in due to damage to large number of cars.

However, insurance companies are sceptical about blanket agreements and prefer to take it on a case-by-case basis. The car manufacturer is understood to have asked insurers to consider the badly damaged cars as `complete loss'.

However, as per the tariff applicable to motor insurance, a case can be judged as `complete loss' only if repair costs exceed 75 per cent of the value of the car, said an insurance company official.

`Complete loss' means that the car is judged to be non-repairable and hence the sum insured has to be borne by the insurance company.

For many of the higher-end cars, the wait is longer on account of non-availability of electronic components, many of which have to be imported. Of the several Mercedes cars affected during the floods, only three have been repaired so far.

As of now, every dealer is able to roll out only five cars per day.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page