Why Are Car Insurance Claims Rejected?

By BankBazaar | July 18, 2016

Why Are Car Insurance Claims Rejected?

Owning a car is a very common ambition harboured by a number of us. It starts as a fascination for cars from childhood and turns into a necessity as adults. With a plethora of Car Loan offers in the market, buying a car has never been this easy. But the story doesn’t end with buying a car. One has to make efforts to safeguard the car as well.

Did you know that in India the most claimed insurance is related to motor accidents? Statistics say that almost 10,000 motor insurance claims are made in a day – with over 1,000 claims coming from the larger cities. What’s better? Most of these insurance claims get paid.

But, at the same time, there are many uninsured vehicles out there. Also, some owners don’t file claims because they are not aware of the process. And a few claims get rejected because of the flaws in our administrative system.

Now, let us first address the question – why should you get your car insured? The main reason is that you get unlimited liability for third-party injury if you meet with an accident. The Motor Accident Claims Tribunal decides the compensation amount and nowadays awards of over Rs. 50 lakh are common. But if you don’t have third-party insurance (which is mandatory, of course), you’ll be paying this amount from your pocket. There are almost 1,000 third-party claims filed in a day, so don’t you think it is better for you to get one?

Car Insurance can cover the cost of your vehicle’s damage too, apart from third-party liability. This is not a mandatory cover, but it is a boon with the rising cost of repairs.

Don’t know how to claim your Car Insurance in case of an accident? Fret not! The process is quite simple. Just follow these steps:

  • If someone has an accident, he / she should register the claim by calling the insurance company on the toll-free number and providing the basic information required, as sought, by the insurer. This may be done in case the vehicle needs a tow.
  • Capture the accident on camera if possible. You can use this to establish how the damage was caused.
  • Inform your insurance company about the accident. You could do this after getting your car to the repair shop.
  • Get your car to the nearest workshop.
  • Repair shops usually take up ownership of the claims process which includes vehicle inspection, paperwork, and follow-up, saving you the trouble. Nowadays, you don’t even have to pay the workshops for the repair as your insurer will pay them directly.

Additional Reading: File a Claim with Your Car Insurance Company

That was simple, right? But yet, many don’t claim their insurance because they are intimidated by the process. Don’t be one among them, please!

Moving on, let us now explore the reasons why your claim may get rejected. Most Car Insurance claims get rejected because of some easily-fixable reasons. Let us discuss the top reasons why your Car Insurance claim is likely to be rejected:

  • You do not have a valid license. Either your license is fake, it has expired, or it is for a different vehicle category.
  • You were using your car for commercial purposes (for instance, as a taxi) but your insurance policy states personal use. If you’re going to use your car for commercial purposes, then buy a commercial Car Insurance policy.
  • An accident or theft of your car is an unfortunate incident. But if the insurers find out that the mishap happened because you were under the influence of alcohol or drugs, then you can forget your Car Insurance claim. Drunk driving, or driving when intoxicated, is strictly prohibited and this can lead to the insurer rejecting your claim.
  • If your car has been stolen or has met with an accident, it is your duty to inform the insurance company within the stipulated time frame. Failing to do so will lead to rejection. Usually, one is obligated to inform the insurer about the accident or theft within 48-72 hours.
  • You own a second-hand car and the insurance is in the name of the first owner. Ensure that you get the seller to transfer the insurance in your name when buying a second-hand car.
  • If your car undergoes any repair before informing the insurer, then the insurance company is not obligated to cover it. Repairing prior to informing the insurer is a big no-no as the experts from the insurance company need to analyse the damage and estimate an approximate repair cost.
  • You’ve installed an LPG kit in your car but you haven’t registered it with the RTO (Regional Transport Office) or your insurer.
  • Any negligence on your part, such as starting the engine in a water-logged car or leaving your car unattended, leads to rejection.
  • With the increasing age of your car, its net worth starts to depreciate. The value of your car will not be the same as it was 10 years ago. After investigating, if the insurer thinks that your car’s value due to depreciation is lesser than the overall repair cost, then your Car Insurance claim will undoubtedly be rejected.

Now that you know the different conditions under which your Car Insurance claim could get rejected, let us discuss a common Car Insurance myth. Haven’t you seen people fighting in the middle of the road trying to put the blame on each other? Well, that is completely unnecessary! When you meet with an accident, you don’t need to verify that it was the other driver’s fault to claim insurance for your damages. Whether it was the other driver’s fault or yours, each car’s insurance will pay for its repairs. So, don’t waste your time picking a fight in the middle of the road and causing inconvenience to other drivers.

Tip: If you don’t want to burn a hole in your pocket on Car Insurance, then you should avoid buying it from your car dealer. Buying it separately will save you a lot of moolah.

Additional Reading: Why Is Car Insurance A Must In India?

Car Insurance also offers plenty of useful extensions and add-ons to choose from. Some of the add-ons are tyre repair extensions, zero depreciation, and engine seizure.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit www.bankbazaar.com for the latest rates/offers.

6 thoughts on “Why Are Car Insurance Claims Rejected?

  1. sanjay jain

    In accident, my front right side bumper, fender were damaged and left side door and fender. I stated that car gushed in my right side front part of my car and two wheeler from left hand side. I claimed for my car left hand side dents on door and fendor and also right side front fender, bumper. he rejected my back bumper claim saying i need to file fir stating that left hand side part was damaged by activa person. And he can only pass claim for my front right side damage. My question is is it necessary to file fir for this. There was no injury to any person. and can claim manager reject claim just because i did not file FIR. Who will file fir for just a person on activa made dents on my car in accident.

    Reply
    1. Team BankBazaar

      Hi Sanjay,

      The filing of an FIR for a claim settlement will depend on the terms and conditions of the insurance policy that you have signed up for. Please go through these terms and conditions to determine whether it will be necessary for you to file the FIR.

      Cheers,
      Team BankBazaar

      Reply
  2. Nila

    Hurrah, that’s what I was exploring for, what a information! present here at this webpage, thanks admin of this web site.

    Reply
  3. Abhinav

    My car met an accident but after 2 days,While talking to customer care I informed on very lighter node as questions. As I was irritated by accent and questions of customer care executive.
    I informed wrong about date of accident and person driving car as so many questions he was asking.

    But when I went to service center form I filled and details which was correct. My fault was while taking to customer care I was very casual.

    Can this be basis of claim denial as amount is close to 5 lac.

    Please suggest.

    Reply
    1. Team BankBazaar

      Hi Abhinav,

      Thanks for writing in. Insurance is an agreement between the insured and the insurer. In the case of false information provided to the insurer, the claim may not be processed. Not only will the claim be rejected, but your insurance policy can be canceled for lying.
      However, as you’ve provided the correct information in the form later, chances are that your claim will not be rejected. Hope this helps!

      Cheers,
      Team BankBazaar

      Reply

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