10 reasons that may lead to the rejection of your auto insurance claim
Your motor vehicle is probably your single biggest asset after your real estate property and financial instruments. Therefore, it makes sense to insure your vehicle from accidents, collisions, damage from natural calamities, theft, and third party claims. Moreover, third party insurance is mandatory in India and covers claims of damage to others and their assets due to your car.
However, rejection of car insurance claims is also pretty common and is usually based on genuine reasons. Most of the rejections take place either due to the policy holder’s ignorance or negligence. In such a scenario, it will help if you know what your car insurance policy covers and the reasons for it getting rejected as well.
Let’s go through some of the major reasons on the basis of which insurers may reject your car insurance claim.
Undertaking the repairs before informing your insurer about the accident:
You should always inform your insurer about the accident before getting your car repaired. Authorized personnel from your insurer will inspect the damages, estimate the extent and cost of damage as well as help you get the best deal for repairing the damage. If you get your car repaired after accident on your own and then intimate your insurance company about the settlement, your insurer has the right to reject your claim. This is so because your insurer will be unable to trace the accident and repair, therefore, leading to the rejection of your claim.
Not informing the insurer within the limited timeframe:
Your car insurance claim will be rejected if you fail to intimate your insurer about the accident or theft within the set timeframe. I.e. between 48 – 72 hours.
Not transferring your name in your insurance policy copy after purchasing a used car:
It is quite possible that you forgot or willfully ignored to transfer the existing car insurance policy in your name after purchasing a used car. If that is the case, your claim will be rejected by your insurer.
Driving under the influence of alcohol or drugs:
Your car insurance claim will be rejected if the accident happened while driving under the influence of intoxicants, such as drugs or alcohol.
Driving without valid licence:
If the accident happened when you or someone else was driving your car without valid licence, your car insurance claim will be rejected. Therefore, ensure that you renew your driving licence and do not allow any person without a valid driving licence drive your car.
Using your private car for commercial purpose:
Your motor insurance claim will be rejected if you were using your private vehicle for commercial purposes. If you intend to use your vehicle as a passenger vehicle or as a public goods carrier, buy a relevant insurance policy such as goods carrying vehicle insurance and passenger carrying vehicle insurance.
Failure to prevent theft:
The insured should take all reasonable steps to safeguard the vehicle from loss or damage. If your motor vehicle insurer is convinced that your negligence led to the theft of your vehicle or the items within, your claim will be rejected. Some insurers also reject the claim on the ground of leaving your vehicle unattended without proper precautions as the insurers want their policyholders to be cautious about their vehicle and take preventive steps.
Consequential loss:
Consequential losses result from direct loss. Suppose, your car enters a flooded area and you damage your car engine by continuing to drive your car in the flooded area. In such a case, your claim would not be entertained by the insurer. Now, let’s assume that an accident leads to engine oil leakage in your car and you continued to drive on leading to engine seizure. Again, your motor insurance claim will be rejected by the insurer.
Not informing your insurer about CNG/LPG kit installation:
Installation of CNG/LPG kit requires additional premium. If you fail to inform your insurer about any such installation, your claim will be rejected.
Damages from mechanical or electrical breakdown:
Your claim will be rejected if the damages occurred due to some mechanical or electrical breakdown and not because of any external impact.
Your car insurance aims at protecting you and your car against unexpected accidents and risks. However, circumstances may arise where your claims can get rejected either due to certain exclusions or clause not being met, that was outlined within the policy. Therefore, read the policy documents in detail so that you get familiarised with the claim related procedures and documentation and avoid your future claim being rejected.
(The article has been written by Yashish Dahiya, CEO and co-founder of Policybazaar.com)
