My car, for which I am still repaying the EMIs was stolen some days ago. Since the EMIs are still outstanding, who will get the settlement from the insurer in case of a total loss or untraceable car?
The interest of the lender in the claim amount is limited up to the outstanding balance of the loan amount
My car, for which I am still repaying the EMIs was stolen some days ago. Since the EMIs are still outstanding, who will get the settlement from the insurer in case of a total loss or untraceable car?
Sumit Chaudhry, Gurgaon
The incident is unfortunate. But, as the car was bought on a loan and you were repaying the loan when it was stolen, the insurer would have issued the policy with a ‘agreed bank clause’. The implication of this clause is that in case of any claim under the policy, the claim would be payable to the lender. However, the interest of the lender in the claim amount is limited up to the outstanding balance of the loan amount. Therefore, in your case the insurers will be issuing the cheque of the settlement amount in favour of the lenders only. After receiving the settlement amount, the lender will deduct the outstanding amount of the loan and remit you the balance amount.