As per the law, any person who owns a car in India has to get a basic third-party liability insurance cover if not a comprehensive one. However, to be on the safer side and to protect yourself from financial loss in case of an accident, damage because of natural or man-made disasters and theft, you should get a Comprehensive Car Insurance cover. The insurance companies pay a major part of the repair cost, but there are many reasons that can lead to rejection of the insurance claim. If you are aware of the common reasons, you can avoid them to reduce the chances of rejection.
Here are the top 10 reasons why your car insurance claim can be rejected
- Delayed reporting
The first thing you should do in case of an accident, damage or theft is that you should inform the insurance company in the time frame they have specified in the insurance documents. In most of the cases, they usually give 24 hours to 48 hours to do so. In case you fail to report it to the insurance company in that time period, the chances of claim rejection will be higher.
- Undisclosed modifications
Many car owners prefer enhancements that help in improving the appearance and performance of the car. However, there are chances that these modifications can increase the chances of accidents or theft. Some modifications are even against the law. If you are opting for any modification to the car, it is your responsibility to inform the insurance company immediately. If you fail to inform the company in time about the modifications you got, there are chances that the insurance company will reject your claim. Please note that informing them about modifications is also important because of the reasons that some modifications help in reducing the premium cost, such as by installing anti-theft devices. So if the insurance company knows about the modifications, it will be a win-win situation for both parties.
- Lapsed policy
One thing you need to keep in mind is that car insurance policy is only valid for one year. It is advised that you should renew the policy before it lapses. In case you miss out renewing the policy in time, the insurance company will reject the claim amount. To avoid any rejection, it is important that you pay the due premium on time. You can also set up an automatic reminder facility with the insurer that will remind you to renew the insurance policy a month before the due date. As per the regulations, most of the companies allow buyers to renew the policy up to 60 days before the due date.
- Driving without a valid license
Anyone who is driving a car must have a valid license on him or her all the time. If you are involved in an accident without a valid driving license, you will not only get in legal trouble, but your claim will also get rejected by the insurance company.
- Driving under the influence of drugs or alcohol
It is your responsibility to drive the car only when you are sober. If you get involved in an accident while under the influence of alcohol or drugs, the insurance company will reject the claim as it is against the law to drive under the influence.
- Consequential damages
The damages that are caused because of the actions of the policyholder are known as consequential damages. One of the common regulations among all car insurance providers is that they do not provide coverage for consequential damage. For example, if the policyholder decides to drive the car through flooded street though it is understood that it may cause severe water damage, the insurance company will reject the claim. The right choice in any such situation will be either not use the vehicle on that day or stay away from the areas where your car can get damaged.
- Wear and tear
The main aim of car insurance policies is to provide coverage for the damage caused by sudden and unforeseen circumstances that are unpredictable. For example, if the damage has been caused by an accident, collision, natural calamity or man-made disaster, the insurance company will provide cover for the damage. On the other hand, if you raise claim because of the wear and tear that have occurred over a period of time, the insurance company is not obliged to honour the claim.
- Using the personal vehicle for commercial purposes
All insurance companies have different insurance plans for different purposes. They charge an additional premium if you are planning to use the vehicle for commercial purposes compared to vehicles marked for personal use. In case you decide to use your personal vehicle for commercial purposes without opting for the right insurance plan, the company will have the right to reject any claim raised by you in case of an accident or theft. Thus it is important to provide information about the usage. There are options to change a private vehicle to a commercial one, and for that, you need to make changes in its registration as well.
- Ignoring terms and conditions of the policy
If you are not using the vehicle as per the terms and conditions mentioned in the insurance policy, the company can reject the claim. For example, if you are driving the car with more passengers than prescribed, the insurance company can reject the claim.
- Fraudulent claims
One of the main reasons of getting rejected for the claim that you have filed is a fraudulent claim that you might have made in the claim documents. Some of the common ways to file fraudulent claims include presenting misinformation about the accident, exaggerating the damage to receive the higher claim and hiding detailed information about the accident.
To make sure your insurance claim is not rejected, you should familiarize yourself with the process of filing a claim. It is always better to get the vehicle repaired from an authorized service station and if they are on the list of the insurer for cashless payments than there is nothing better than that. You should be aware of the reasons that can lead to the rejection of the claims as it will help you in avoiding such instances. Always be truthful to the insurance company and pay the premium on time to ensure speedy processing of the insurance claim.