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Whom will the insurers pay the claim if there is an outstanding loan on the car?

In the case of any claim under the policy, the claim would
 be payable to the lender
By OLM Desk | October 22, 2017

My car, purchased under a loan scheme, was stolen. Since some EMIs are still to be paid, will the insurers pay the claim to financiers or to me?

Vaidehi Mule, Mumbai

Since there is an outstanding amount of loan on your car, your insurers would have issued the policy with ‘agreed bank clause’. The implication of this clause is that, in the 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 then will remit you the balance amount.

 

olmdesk@outlookindia.com

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