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Isn't this the largest insurance scam?

Discussion in 'Automotive Insurance and such' started by esterix, Aug 16, 2006.

  1. esterix

    esterix Club Guest

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    Having seen this new classification this morning, I thought I'd pose this to those in the industry or in the know. And it's been bugging me for years. If I bought a second hand car for RM100,000 and decided to insure it for RM100,000, that would be considered logical by most. But if, for whatever unfortunate reason, the car was written off, then I believe I should be paid RM100,000 (minus any administrative cost, and excess). Well that's the theory. In practice, insurance companies only pay you their estimate of "market price", which to me is hogwash. Simply, they have a different "market price" when it comes to valuation for insured sum, and another "market price" for claims. This year, I was convinced by my insurance company (a very well known one) that my six year old car had a market worth of RM100,000, and that I should insure for that sum. However, 6 months on, a quote from a dealer for a second hand part exchange, valued it at a maximum RM55,000. So here is my burning question - why the hell would the insurance company except my payment for a RM100,000 valuation, when i am now led to believe that they may only pay RM55,000? I know for a fact that US, UK and Australian insurance companies do not behave in this unethical manner, but unfortunately their local counterparts are ruining the good name of the industry. I have never made a single accident claim in my 25 years of driving, but that doesn't seem to have made an ounce of difference in the way I'm being short changed. Any other thoughts?
     
  2. funfer_fahrer

    funfer_fahrer Club Guest

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    That is what normally the case. Let's say when your car is written off, the insurance company will offer you certain amount of compensation which is definitely lower than the insured value. Remember, it is just an OFFER. It is up to you whether or not to accept it. But, if you wish to be compensated more (i.e. up to the original amount) you need to see them in court. Now, the question is how many people would like to spend extra time and money in court? For all you know, you actually been FORCED to accept the OFFER. Well, how else do you think insurace company make money? It is not considered cheating because it is legal.
     
  3. Slide

    Slide Club Guest

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    I think it does not matter, if i am willing to insure my car for a higher price and i total it, the insurance company should pay out according to what they have agreed to accept. This is important to you guys who mod your cars and KNOW they are worth more then what's written in the Star. I say unfair!
     
  4. ah lian

    ah lian Club Guest

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    knowing their practice.... i have always insured my car at the market value...
    and i pray hard every night that my car will be safe. anyhow hor, money will never be able to compensate the loss of my beloved darlings. :mad:
     
  5. Alvin

    Alvin Guest

    My friend had an accident in australia & car was total lost. After police report & confirmation is done, insurance company replace the car with a new one! Of course the insured car was less than a year old.

    I thk consumers has rights, problem is in M'sia consumers lazy to fight for their rights. Just accept lor. Tidak apa attitude. If consumers start fighting back & demand what is rightfully ours then things will start to chg.
     
  6. bmwcar

    bmwcar Club Guest

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    From a friends experience who had his 2 yr old Sentra stolen in 2003, the insurance company would make a very low offer initially and then up to a resonable level after about 1 to 2 months of negotiations.......

    Seems that they hope that since most claimants have no car and still paying the stolen car repayments and needs the cash to get a new car, they would jump at the first offer......

    This process is not the most ethical but still legal........
     
  7. funfer_fahrer

    funfer_fahrer Club Guest

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    A legalised daylight robbery..:(
     
  8. theCROW

    theCROW Club Guest

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    I couldn't agree more.
    Somehow I think we should all become like kiasus & kiasees in temasek.
    They are so kiasus, they tend to become so irritating people. They complaint alot...on everything! But the good thing is ..their gov. have to listen to them.
    And that my frens, is how it should be.
    Gov. should be afraid of us.
    Not the other way round.
     
  9. Jipster

    Jipster Club Guest

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    I have a feeling this is the case because our market has been screwed up by too many bogus claims.

    Given the hostile market insurers resort to just about every trick in the book short of outright cheating to make their money.

    The government in turn probably turns a blind eye to consumer concerns because they invariably side with big business. Not without reason mind you, bogus claims raises the cost of doing business.... someone has to bear this cost and it happens to be us. Its either this or have:

    insurance companies go out of business; OR

    refuse to insure auto risks (some insurers do not insure cars out of choice); OR

    force the imposition of western style policies which profile the insured according to occupation, where they live etc. i.e. high risk profiles pay more e.g. young (poor) drivers, drivers with demerit points, live in crime risk areas etc. pays higher premiums than say an ACTUARIST (rich) in his 40s living, clean licence in a gated community in Taman Duta; OR

    maybe a combination of the foregoing.

    Basically - WE SCREWED OURSELVES (or at least some us did......)
     
  10. funfer_fahrer

    funfer_fahrer Club Guest

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    What happened is that the insurance company actually controls the government without they realizing it. If some of you remember, at one time there was this EPF Annuity Scheme (in the name of investment and protection) which was a total crap being introduced in the system. After one year the government finally realised that it didn't do any good to the people. Insurance companies are also more powerful than the local banks and that also explains why some banks are adopting this approach. When it comes to claims, basically you are all alone out there. Just make sure you get a good agent who is sincere and explains everything thoroughly.
     
  11. esterix

    esterix Club Guest

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    If there are too many bogus claims, then clam down on them. Why shouldn't insurance companies then play the lead role in rewarding the innocent folks with fair deals? After all, aren't insurance companies being paid to provide "peace of mind in times of crisis"? Well, at least that's what they all claim when it comes to selling you life, medical...

    I'm not a lawyer, but isn't there an equivalent of offer & acceptance in contract law that is applicable? i.e. Insurance companies offers to insure your car for xxx amount, therefore accepts that they have to pay xxx amount if there is a full claim?

    Sorry, but just because the house you rented has a leaking roof in one bedroom, it doesn't give the landlord the right to deny you access by locking the bedroom. You rented the whole house in the first place, or at least that's what the contract stated.
     
  12. Jipster

    Jipster Club Guest

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    Hang on dude..... insurance companies do not control the government.... but they sure are influential because they hold in their coffers billions, trillions of the rakyats money which in turn is invested in billions and trillions worth of Malaysian company shares, property and god knows what else. Its in the nature of these things. You simply dont ignore them.

    Of course the Government knows the influence they (insurers) hold over them.... the same way insurers realise the power the Government wields over them - their insurance licence.

    BUT to expect either to do the unthinkable - say insurers stop paying claims for no reason or the government pulling their licence is UNLIKELY. Both will toe the line on the expectation that the other can and will take action if there is a transgression..... mutual deterrence.... or just basic rule of law....

    Anyway, I think the industry simply lacks a level of sophistication, integrity and professionalism.

    I'd like to hear an insurance industry professional come in and give his views on this.
     
  13. Jipster

    Jipster Club Guest

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    "there are too many bogus claims, then clam down on them" ..... damn! havent you heard? There is an entire cottage industry built around this. Insurance scams are old hat dude, it happens every day and every second.... its difficult to tell them apart.... so the insurance companies just collectively clamps down on everything and everyone.... its easier that way.

    "I'm not a lawyer, but isn't there an equivalent of offer & acceptance in contract law"... yeah, to a point. Basic concepts of contract do apply but insurance has its own specialised set of rules and concepts.... its the same but different :)

    Like I said if everyone was more professional and not out to screw each other e.g. workshops screw insurer screw loss adjustor screw the consumer screw the tow truck guy screw the parts guys screw bank negara..... its a nice little merry go round
     
  14. fabianyee

    fabianyee Founding Member

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    The biggest problem the insurance companies face in this country is high theft rate.... and cars on the hot list are cars above RM100k, some costing in excess of RM300k...

    Actually, there are a lot of factors and domino blocks to the big big picture... First thing is that the car prices here are horrendously over priced. That in turn costs the insurance premium to be higher. and when the car prices are high, it makes stealing a car a lucrative crime. And the fact that registering a stolen car with the authority isn't exactly that difficult. U can call that insider job or criminal ingenuity, makes no difference. It's a big big circle to go round if you want to put a finger on the real culprit behind the whole scenario.

    Is the insurance co the ones to be blamed? To a certain extent, I do not think so. They too have to maintain the profit margin to stay afloat.

    But whatever it is, we have to be educated consumer nonetheless on matters like this. Know our rights when the occassion calls for it.
     
  15. esterix

    esterix Club Guest

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    It is perfectly fine if you need to maintain your profit margin. But I'm talking here about being fair to all. Just let your customer know what the market price is for his car (equating it to the full claimable value), and allow him to insure it for not a cent more.

    If you are talking about the high price of cars in this country, then perhaps the best place to start is to review the pricing of third party coverage. You can pay third party coverage for 20 years, but I doubt if that will even pay for a wing mirror of an E63!
     
  16. funfer_fahrer

    funfer_fahrer Club Guest

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    Fab, IMHO in any business, you cannot win all the time. After all, if you can't stand the heat, stay away from the kitchen. I am sure the insurance companies are aware of this and they should have a mechanism installed to overcome this problem. The problem is that they are passing the bulk on to the customers.
     
  17. fabianyee

    fabianyee Founding Member

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    Not in the trade to give my further 2 sen but that's my take on part of the whole picture. Of course the insurer can take steps to counter the problem but then they are not the law enforcers. The gov has a big part to play in the whole equation. However, I can't deny the fact that insurance co, like in other trades, always want to maximise profit margins, so it's up to us consumers to demand for rightful compensation.
     
  18. napee

    napee Club Guest

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    i concur with jipster. insurance companies here are facing prb with false claims. so it's a case of 'nila setitik, rosak susu sebelanga'. becoz of these bad people, the companies then took the easy way to protect themselves. but then, insurance here is comparatively quite cheap anyway. they've been asking for premium increase but refused.

    referring to the original post, the company do not offer the high price. but it's the AGENT that does so. becoz the agent will get rewards based on the sum of money he brought for the insurance company. it is called overinsure. some people, well most, thought they'll get the amount they insure it for, but they won't. it follows market price. check with them on 'their' market price and stay close to that.
     
  19. KL2DC

    KL2DC Club Guest

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    Insurance always pay replacement value at market value...and yes sometimes some negotiations are required to adjust claims. Its routine...

    I think the issue with loss is when you are upside down, i.e. you owe more on your car loan than market value and in the event of a loss, the insurance only pays out to the finance co the market value of the car which is less than the outstanding amount. That's why the thought of very long term financing scares me. There is actually GAP insurance to cover that difference...
     
  20. WKK

    WKK Club Guest

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    Actually, the whole think is due the wordings spelled out in the insurance act.... i have extract the wording from the Act.....
    Principle of indemnity

    The principle of indemnity is crucial in insurance. Based on this principle, the insurance cover will compensate your loss by putting you back to the same position you were in immediately before the loss. As you will be compensated only for the loss suffered, you cannot 'profit' from a motor insurance claim. Therefore, if your vehicle is more than five years old, betterment will apply.

    Betterment occurs when in the course of repairing an accident-damaged vehicle, an old part is replaced with a new franchise part. In line with the principle of indemnity, you will have to bear the difference in costs as you are in a better position after the accident with the new franchise part. However, the application of betterment is at the discretion of your insurance company. Should your insurance company apply betterment, it will be in accordance with the standard scale of betterment adopted by the industry.

    How to lodge a complaint and the redress avenues available
    · If you have a complaint about the products or services of your insurance company or you are not satisfied with the rejection or offer of settlement of a claim, you should first try to resolve the complaint with the Complaints Unit of the insurance company concerned.

    ·
    If you are still not satisfied with the decision, you can write either to the Customer Service Bureau of Bank Negara Malaysia or the insurance mediator, free of charge. However, the scope of the mediator is limited. Therefore, you need to check with the officer from the Complaints Unit of the insurance company on the proper avenue for dealing with your complaint.

    ·
    Alternatively, you could take your case to court.

    By the time you go thru the process... you just get so frustrated...
     

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