Saga of Insurance Fraud and Cars in India

We had a major accident in 2016 and when the bill came to fix our car, it was a whopping 15 Lakh rs. Learn about how we got insurance in India to cover for the damage.

Written by: Soumya Nambiar

Last Updated on:

Disclaimer: This post may contain affiliate links we may make a commission from.

It is finally here. After 6 months of fighting with numerous people, our car was finally released to us this week.

Many people asked us what our next steps are, now that we have got the car. We are still exploring our options. But there is no way we are letting anyone involved to walk free after harassing our family for the past 6 months. We believe that one of the reasons, everyone involved were able to drag it for the past 6 months, was due to the lack of awareness and processes regarding auto insurance in India. And that is why I am writing this post. It is going to be a long post, so please bear with me while I take you through our experience and learning from this whole ordeal. If you are someone who owns a car in India, then I urge you to read this and share it as much as possible so that others don’t have to go through the same experience again.

Other parties involved: SBI General Insurance, Akshaya Motors and Mercedes Benz India.

Long story short: Our car (Mercedes E250) met with an accident on 1st July 2016 and the initial estimate given to us was Rs. 15.85 lakhs to repair the car. On 29th September 2016, another estimate was given raising the total repair cost to Rs. 18 lakhs. This exceeded 75% of the IDV (insured declared value) of the car,which as per policy could be written off as total loss. We refused and agreed to pay anything over Rs. 15 lakhs from our pockets. Final bill: Rs. 14.55 lakhs. Insurance Paid: Rs. 13.73 Lakhs and we paid Rs. 80,000. Date of Delivery of car: 10th January 2017 after fighting for more than 6 months.

If you want to read a detailed chronology of events, you can skip to the end of this post.

Concerns and Loopholes in the entire process:

So now we want to highlight the concerns we have, with each of the stakeholders.

Mercedes Benz India:

• Why did the overall cost of fixing the car come to 25-30% of the initial car cost when only 5% of the car was damaged? Why are the spare parts in India sold at such high costs? Who regulates these prices in India? If it was a major accident, then why didn’t features like air bags and active bonnet get activated?

• In spite of having a manufacturing division in Pune, why did we have to wait for one part to arrive from Singapore? What is the ratio of the number of spare parts that you keep at your Pune site?

• If there is someone we have to learn Diplomacy from, then it has to be Mercedes Benz India. Their standard dialogue for anything is “Madam, we cannot do anything. Our dealers are doing their best and it is pending with insurance”. They just don’t want to get involved in solving the matter.

• After our first social media post, we got to know of several such cases of Mercedes Benz India from other customers who were facing similar issues. Has the performance of a Mercedes Benz gone down in the past few years?

• We are a family that has been using a Mercedes Benz car for the past 20+ years, both in India and outside India. After such poor service and support from Mercedes Benz India, is it time for us to shift our allegiance to other luxury auto makers in India?

Akshaya Motors, Bangalore:

• Why are you guys so incompetent and dependent on insurance? Why did it take 6 months to resolve the issue? Why did we have to send multiple mails and call you hundreds of times? There were many instances when calls and mails were unanswered.

• Why was an additional estimate given on 29th September, raising the total estimate to Rs. 18 Lakhs? As you are aware, the final bill came to Rs. 14.5 lakhs. What were your intentions in raising the total estimate? Was this a plan, done in conjunction with the insurance, to snatch the car from us, by ensuring that we will succumb to the total loss claim?

• You had the audacity to threaten to charge us Rs. 500 per day for parking charges when we took one extra day to make our decision. Why didn’t you threaten SBI insurance the same way? They were the ones who delayed it by 6 months.

• As per Mercedes Benz India, you are answerable to them in case a car is parked in your garage for such a long period. Are you guys penalized in such cases? I strongly urge Mercedes Benz to penalize Akshaya Motors for delaying the whole process.

• What was the need for putting up an elaborate show while releasing the car to us on 10th January? Was this done to appease us? Please note that such frivolous demonstrations were not well received by any of us and we realized the real intention behind them.

• This incident just reinforced our belief on how incompetent Akshaya motors is. In the month of December, 3 separate letters came to our residence asking us to send our car to their service center for service. Our car had already been in their garage for the past 5 months. Additionally, they called us multiple times and every time we told the person calling that the car is already at their service centre. Do you understand how ridiculous this is? If it had been once or twice, we would have ignored this as an oversight. But 3 times just shows us their level of incompetence.

• Outside India, in such cases, a replacement car is given in the case of big accidents till the car is repaired. This is done to ensure that the insurance process is faster. Why is this procedure not there in India?

Saga of Insurance Fraud and Luxury cars in India


Saga of Insurance Fraud and Luxury cars in India
Car At The Garage which shows the minimum extent of damage

SBI General Insurance:

• You have the worst staff. They don’t pick up calls most of the time or respond to mails.

• Why is there so much delay in sending us written communication? Why do we have to insist and follow up every time for you to send us written communication?

• Why did your insurance staff delay the whole claim process by 6 months? Was this a deliberate attempt by your insurance staff to make some money on the side by selling our car for salvage value?

• Even though we were eligible for Rs. 17.25 Lakhs, why were we offered only Rs. 15 lakhs? What is the logic behind coming to this figure?

• Why is the type of policy not made clear in the beginning? We realized only at the end of the whole ordeal that our policy is not a consumables receivables policy.

• Why is there no transparency in any of your processes? There is no clear-cut way of finding out how to escalate an issue. Even after escalating multiple times over call and emails, we have still not received a single reply from your side till date. Why did we have to escalate to IRDAI and PMO’s office to finally get our claim settled?


It took us 6 months to get this resolved. 6 months without a car!!! If we didn’t have a backup car, what would we have done during this time? What should be our steps be in the future? Who will compensate for the loss of our precious time and patience? Who will give us answers for the above questions? What should we do to increase awareness of insurance fraud in India? All we can say is that if someone tells that your car is a total loss, research as crazy and do not succumb to the insurance company’s threats.

Saga of Insurance Fraud and Luxury cars in India


Appendix A:

Chronology Of Events:

• Achan (Our dad) was driving back to Bangalore from Calicut on 1st July 2016 in his Mercedes E250 with his colleague. 70 kms from Mysore, around 8PM, car met with a minor accident after hitting a stone. The reason why I say it was a minor accident was because both the occupants did not have a single scratch on them, none of the Air bags deployed and the active bonnet system did not get activated. Active bonnet is a feature in all Merc cars where in the event of the front bumper hitting anything, the bonnet is raised. This is done to prevent a pedestrian from hitting the windshield in the event of an accident. Car was towed to a nearby garage in Mysore.

2nd July 2016: Car was towed from Mysore to the dealer’s service center (Akshaya Motors) in Bangalore.

4th July 2016: A bill of around Rs. 15,85,000/- was sent to us. We decided to go for insurance.

• All requested documents were sent to Akshaya motors by 19th July. This went through multiple iterations. All documents were sent to insurance within the next few days.

• One guy from SBI insurance (or third party) came to get a signed affidavit from us on the nature of the accident during last week of July. He said this was for police verification purposes and he assured us that the claim will be processed soon.

• From August 1st 2016 to September 28th 2016: We sent multiple reminders asking about the status of the car. Every time we got a reply saying that it was pending with insurance for approval. We also had multiple phone conversations with both the insurance and dealer.

29th September 2016: Additional bill of Rs. 2,08,000 was sent to us. This made the total bill amount to around Rs. 18 lakhs. Our IDV (Insured declared value) was around Rs. 23 lakhs. The total bill came to more than 75% of our IDV and hence insurance was not liable to repair the car. They could declare the car as total loss. In such a scenario, the car will be bought from us at the IDV rate and then sold to 3rd party garages for salvage value. All this was speculation at that time since this was not told officially to us by either the insurance or the dealer when this bill was sent.

5th October 2016: We got oral approval from insurance to dismantle the vehicle. Achan told them that his only condition will be that he has to be present during dismantling. Complete radio silence from both the insurance and the dealer for the next one week.

12th October: After a threatening mail of going to consumer court from our side, Akshaya sent a mail saying that they are expecting an additional Rs.1.5 lakhs bill in addition to the billed amount, bringing the total to Rs. 19.5 lakhs. We also get a phone call from SBI general insurance saying that they are going to declare our car as total loss. We tell them that we refuse this and ask them to send a written communication and that the decision can be made only after dismantling the car. We also tell them that we will allow dismantling only if a technical member from Mercedes Benz India is present. Mercedes Benz India refuses our ask at this point.

25th October: Our first social media post went live. Mercedes Benz India agrees to send someone for the technical inspection.

27th October: All the concerned parties went to Akshaya motors (us, Mercedes Benz India representative and SBI general insurance representative) for technical inspection and negotiations. Insurance tells us that their final offer to us is Rs. 15 lakhs or total loss. If we wanted the car, anything that comes above Rs. 15 Lakhs will have to be borne by us. We walk out of there after an argument. Written communication of the offer of Rs. 15 lakhs or total loss is sent to us by SBI general insurance.

28th October: Akshaya motors sent us a threatening mail to make a decision or they will charge Rs. 500 per day for parking charges. We reply saying that we accept the offer of Rs. 15 Lakhs under protest. We agree to pay the remaining amount from our pockets.

2nd November: Dismantling of the car is done by Akshaya motors in the presence of us and the surveyor from SBI General insurance. Some parts which were not part of the previous bill are added, around Rs. 97,000. We are also told that many of the estimated parts do not require to be changed. But when we asked them to prepare the new bill, reducing the cost of all these parts, it is not given to us.

4th November: Parts are ordered and we get a confirmation from Akshaya Motors.

17th November: All parts arrive and work on the car starts.

30th November: We get oral confirmation from Akshaya motors saying that the total bill is around Rs. 14.5 lakhs which is well within the Rs. 15 lakhs offered to us by SBI General insurance. Please note that the estimate on 29th September was around Rs. 18 lakhs. We are also told that we have to pay Rs. 22,000 for the battery which is not covered under insurance. We agree to pay.

8th December: We get confirmation from Akshaya motors that the car is ready and the inspection has also been completed by insurance.

9th December: We send a reminder and insurance replies saying that the car will be released by 17th of December after approval from head office. Since the amount was huge, it had to go to head office for approval.

17th December – 2nd Jan 2017: We send multiple reminders but receive no reply from insurance.

31st December 2016: Insurance staff in charge of our claim quits the organization.

3rd January 2017: We receive a mail from the new insurance staff saying that they have approved a bill of Rs. 13.06 lakhs. We ask why there is a difference. We are told that ours was a depreciation policy and not a consumables receivables policy. In this scenario, wear and tear parts are not covered. We point out that 3 of the parts (Rs 67,000) are not wear and tear parts. They send the claim back to head office for approval. We agree to pay the remaining amount including Rs 22,000 for battery.

10th January 2017: We receive oral communication in the morning saying that approval has come for the remaining 3 parts. Achan goes to Akshaya motors around 12 PM and refuses to leave till the car is released. Akshaya motors say that their hands are tied since they cannot do anything until written approval comes. Achan is adamant and refuses to leave. Our calls and emails to SBI general insurance are not answered throughout the day. Finally around 3:45 PM, written approval comes. We pay the balance amount of Rs. 82,000. I reach Akshaya Benz around 5:15 PM and they are still cleaning the car. Finally, around 6 PM, after an extensive drama show by Akshaya motors, we take the car home. Why do I call it a drama? It is the first time I am seeing where a pooja is conducted for an old car. Apparently according to them, this is common in the case of big accidents. In addition to the Pooja, they present Achan with a box of chocolates, a big car key and a Ponnada (This is a cloth usually wrapped around people if we want to show their respect).

So this is what transpired during the past 6 months. I hope now you have a sense of the kind of experience we had to face. As of now, we are figuring out our options and hoping that this reaches the maximum number of people.

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About Soumya Nambiar

Soumya Nambiar here. I am an avid traveler, travel blogger, vegetarian foodie and entrepreneur from Bangalore, India who grew up in Tanzania, Africa. I have been to more than 60 countries and in this blog, I write about my personal experiences as an Indian traveller around the world as well as my struggles as a vegetarian. I can be reached at [email protected].

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