Why a car insurance claim is denied

When you raise a claim after a car accident, you would be in anticipation of that money for the payment of your medical bills and other associated costs. However, things may not always happen as per your expectations. Many a times, people face situations where their is rejected. If that happens to you, you need to identify the reason for the same, so as to not encounter such a situation in the future.

Listed below are some of the common reasons that insurers provide for the refusal of claims:

  1. Expired car insurance policy

    When you are in possession of a new car, you are likely to keep the car under the cover of an insurance. But as the years pass, there may be an instance where you forget to renew your insurance. This should be taken seriously, as the absence of an insurance exposes you to the risk of an accident without a cover. The insurance provider will reject your claim even if the mishap occurred one day after the date of policy expiry.

  2. Delay in filing the claim

    In case your vehicle has met with an accident it is prudent to report the mishap as soon as possible. If there is a delay in filing claims, most insurers tend to reject the same.

    Usually, insurers provide a window of 24 to 48 hours for the accident to be reported. Additionally, insurance companies always reject a claim if the driver drove the car right after the accident, subsequently causing further damage to the vehicle.

  3. Consequential damages

    To understand this, let us take the instance of a car having a damaged part that is not covered under insurance. In case this part causes a damage to another part of the car (that is covered under the policy), the insurer will not cover the latter damage, as this has occurred due to a consequential effect.

  4. Driving under the influence of intoxicants

    If you meet with a car accident while driving under intoxication, there is no question of raising claims for the reimbursement of damages.

  5. Driver not able to produce a valid license at the time of the accident

    Every driver operating a motor vehicle on Indian roads are mandated by the law to be in possession of a valid driving license. In the case of an accident, if the driver was found to not have a valid license, insurance claims cannot even be raised. Having an expired license is equivalent to having no license at all.

  6. Not informing the insurer before repairs on the car

    If your car is involved in an accident, it is crucial to inform your insurance provider of the same, at the earliest. If you get the vehicle repaired on your own, and then intimate the insurer, they will be unable to trace back the scenario in which the accident took place. In this situation, irrespective of the cost of repair of the car, you stand to face a complete rejection of the claim.

    So, it is vital to get an authorised person from your insurance company to perform a detailed survey of your damaged car before you initiate any repairs on it.

  7. Car insurance policy not in your name

    When the vehicle involved in the accident is a used or second-hand car, and the auto insurance has not been transferred to the name of the new owner, there will be rejections in claims.

    The new owner needs to get the vehicle registered in his name and carry the registration certificate (RC) in the car. He also needs to ensure that the name in the car insurance policy matches with that in the RC, so as to avoid the chance of a claim refusal.

  8. Vehicle used beyond limits

    Insurance providers reject claims if the vehicle involved in the accident was found to be used beyond its limits in an inappropriate manner.

  9. Installations that were added after the original policy was bought

    If you have installed an accessory in your car that was not declared during the purchase of the insurance policy, there is a chance that your claim will be rejected by the insurer. This is likely to happen, irrespective of whether the damage is associated with the new accessory or not.

  10. Accident occurs beyond geographical limits cited in the insurance policy

    The IRDA defines two geographical zones for motor insurance. Metro cities like Mumbai, Chennai, Kolkata and Delhi come under Zone A, and the rest of the country is considered as Zone B. If your car meets with an accident in a zone that is not defined in your insurance policy, you stand a chance of facing a claim refusal.

  11. Claims pertaining to regular wear and tear

    Usually, comprehensive auto insurance policies only cover collisions, thefts, third-party liability and damages due to natural calamities. You will not be able to claim for repairs done due to regular wear and tear of the vehicle.

  12. Inappropriate use of vehicle in extreme conditions

    Overloading a car with more passengers than the prescribed limit, parking in no-parking zones, and not getting the vehicle serviced regularly are some examples of inappropriate use of the car. In case your vehicle was involved in an accident while it was being used inappropriately, the chances of your insurance claim getting rejected are high.

Getting involved in a car accident is definitely a devastating experience. It is followed by payments for the repair of the vehicle and for bearing personal and third-party injuries. In such a situation if your car insurance claim is rejected or is not honoured 100%, you will be highly taxed. So, it is important to be aware of what is covered under your auto insurance policy and follow timely renewal of the policy in order to avoid claim refusals.

GST Update: GST of 18% is applicable on car insurance effective from the 1st of July, 2017

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