Reasons Why Car Insurance Claims Get Rejected

When we choose the policy, we come across the different conditions in policy documents under which insurance claims can get rejected. But soon after buying a policy, we tend to ignore or forget these small details. However, it can come as a shock to you when your claim gets rejected. Hence, it is always wise to read the terms and conditions of your policy. A claim rejection history can also hurt your claim reputation with your insurer in the future. So, here are the conditions under which your car insurance claims can get rejected.

• Modifying the Car: When we buy insurance for our car, the information regarding the make, colour, engine, needs to be declared. Hence, if we wish to make any modifications and include additional accessories to the vehicle, it is important to intimate the insurance provider. If not, they might reject the claim on the grounds of un-notified car modifications if you claim for damages due to an accident to the modified car.

• Missing an Insurance Renewal: On-time insurance renewal is important as any loss incurred during the lapse in delayed renewal can result in claim rejection. For instance, in the case of an expired insurance cover, if the car meets with an accident before the renewal of the insurance, the claim will be rejected as the car is deemed uninsured.

• Driving Without a Driver’s License: It is one of the cases that can lead to multiple problems as it is against the law. In case, you meet with an accident and you do not have a valid driver’s license, the insurance company reserves the right to reject the claim at the outset.

• Drinking and Driving: Drunk driving is a legal offense, and it will lead to criminal charges if caught. In case you were driving, and you hit a vehicle causing a dent in the car and third-party files a claim, your insurer will not cover the expenses under third-party coverage if it is established that you were drunk while driving. Also, in case you are filing for damages to your car that will get rejected as well. 

• Driving Before Ownership Transfer: If you are buying a second-hand car, it is important to change the ownership immediately. For instance, if you are driving a second-hand car in which you have not completed the ownership transfer and an accident takes place, the insurance company can reject the claim on the grounds of not legally transferring the ownership through the RTO. Also, any legal case filed for the incident will be under the current owner of the vehicle.

• Wrongly Declaration: When you take an insurance policy, you declare the purpose of use, which is as a taxi or private or for commercial use. If you cause a dent in your vehicle and you file an own-damage claim, and you were using your private vehicle as a taxi during the incident, the insurance company can reject the claim under breach of the policy condition.

• Fraudulent claim: Your insurer can reject the cover if they find out that a false claim is made. For example, your car has been giving you trouble while starting the engine for some time, but before you get it repaired you hit on a post and cause a dent in the car. If you file a claim saying the accident led to engine trouble it might be considered as a deceiving cause of loss.  

It is sensible to be careful and not commit any mistake that may lead to the rejection of a car insurance claim. It is important to declare the details of the car, the purpose of use, and any additional modifications that you may make to the car as incomplete or incorrect disclosures can lead to a claim rejection. One needs to bear in mind that while making a claim, the insured must be transparent to the insurer to increase the chances of getting a claim approved. It is a good practice, to be honest with your insurer as they can help you understand if your claim will get approved and if not, then why. 

The author is Technical Head- Claims at Digit Insurance

 DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.