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Reasons for Car Insurance Claim Rejections - How to Claim Successfully

Team AckoMay 17, 2022

If you want to drive a car legally on public roads in India, you’ll first be required to buy an appropriate car insurance coverage. In return for paying insurance premiums, it’s normal for you to expect your insurance company to approve claims raised during the policy period.

Reasons for Car Insurance Claim Rejections

However, when a claim is rejected, it’s frustrating, costly, and disappointing. Rejection of car insurance policy claim is not new in the vehicle insurance industry. Though several people would term the insurance company as a fraud for the denial of the car insurance claim, the reason for the rejection by auto insurance companies is mostly based on certain clauses.

In order to avoid your claim being rejected, you should know the reasons for car insurance claim rejections. Here are a few reasons on the basis of which your car insurance claim can be denied:

1. Driving Without a License/Invalid License:

Driving without a driver’s license or with an invalid license, or driving under intoxication is one of the main reasons why your car insurance claim can be rejected. These actions are illegal in India, hence, the insurance company cannot approve the claim in these circumstances.

2. Not Informing Your Insurance Company:

This is one of the common mistakes that most of the policyholders commit. You might get the car repaired on your own and then inform the insurance company for settlement of the claim. It’s hard for the insurance company to track the accident and repair, hence, it makes it difficult for the insurance company to assess the damage and approve your claim.

You should always inform your insurance company before getting your car repaired. The insurer will send an authorised person to inspect the extent of damage to your vehicle, estimate the repair cost of the damage and help you get the appropriate claim for the repair.

3. Not Paying the Premium of Your Policy:

In order to approve your claim, the fixed amount of the premium has to be paid on or before the due date. By paying the premium on time, your insurance policy remains active and the insurer is able to process your claim; however, if it’s not, then the insurance company can deny or reject your claim. It’s a good practice to pay the insurance premium on time to avoid any unnecessary rejections.

4. Not Informing About CNG/LPG Kit Fitted in Your Car:

While you want more from your car in the form of higher mileage by installing a CNG/LPG kit, it’s your responsibility to inform or declare this to your insurance company. The insurance company makes a note of the changes to your car when you buy/renew car insurance, and have it covered under your insurance policy. However, by not declaring the additional kit, you stand a chance for your claim to be rejected by the insurer.

5. Using Your Private Car for Commercial Purpose:

If you have informed your insurance company that you’re using your car for personal reasons, but have been using it for commercial purposes on a regular basis, there is a high likelihood that your claim will be rejected in the event of an accident.

6. Providing Incorrect Information:

If you have declared incorrect details at the time of purchasing a policy to reduce the premium, and if your insurance company realises that you’ve provided incorrect information, your claim will be rejected. 

Never provide incorrect information to your insurer that may lead to denial of a claim and may even make your car insurance policy invalid.

7. Delaying to Report the Accident:

Insurance companies expect you to raise a claim immediately but they do provide a timeframe to report the incident. If you delay reporting the claim and do not provide correct documentation, your claim may be denied. It’s important to inform your insurance company before you give your car for repair.

8. Driving Outside the Specified Geographical Area:

Your claim can be denied if your accident occurs outside the geographical area defined by your insurance policy. Hence, read your insurance policy terms and conditions carefully to understand the specified geographical limits.

9. Modifying and Including New Accessories to Your Car:

When your insurance policy is renewed, additional components, accessories or modification, if any, mentioned in the previous policy are covered automatically. However, if you have added new accessories or modified your car during the policy period, you need to inform your insurer before it’s renewed. After inspecting your vehicle, the insurance company will include these additions in your policy with an additional premium. If you do not declare these changes, there’s a good chance that your claim will be rejected.

10. Disobeying Rules and Regulations:

There are specific rules such as underage driving, drunken driving, etc. that need to be followed. Your claim for own damage will be rejected if it is found that the car accident took place because you were drinking and driving.

Drinking and driving

Driving your vehicle under the influence of alcohol or other strong intoxicants can prove to be dangerous. It’s a risky affair not just for you and the passengers in your car but also for other vehicles on the road and the pedestrians. Lives can be lost due to such irresponsible behaviour!

At the time of claim, if it is found that you were driving the vehicle under the influence of alcohol, then the car insurance cover will be invalid. The policy will not be able to cover your losses, as damages to the insured vehicle in the case of drinking and driving is an exclusion to the policy.

11. Non-cooperation:

You need to raise a claim within a specified period and cooperate with the claims team regarding details related to the event against which the claim is raised. For example, the claims inspector might ask you some questions if you have raised a claim for a car accident. You need to answer those questions honestly.

If you fail to provide an honest narrative or if you do not provide supporting documents (if needed), the insurance company might follow up with you for a while but eventually will reject your claim based on non-cooperation.

Also, read: When Should You Avoid Car Insurance Claims and Why

Tips to Prevent Car Insurance Claim Rejection:

Now that you know the reasons for claim rejection, let’s learn how to claim car insurance successfully.

#1 Inform Your Insurance Company:

The first step is to inform your insurance company about the incident. You can inform them through a phone call, email, or a mobile app.

#2 Report to the Police and File an FIR:

An FIR is a must in case of theft or major accident, especially important in case of third-party accidents resulting in death or bodily injuries. File an FIR in the case of theft of your car immediately.

#3 Provide All Relevant Documents to Your Insurance Company:

Ensure to send all relevant documents to your insurer without any delay. Your insurance company will begin the process of claim only after receiving all relevant documents. Documents such as Registration Certificate, Driving License, claim form, etc. are usually required while raising a claim.

#4 Have Proof of Damages:

It’s better to take pictures of damages to your car as well as the third-party’s vehicle if a third-party is involved in the incident. While your insurance company will send an authorised person to inspect the damages, it’s always advisable to gather proof so it makes the claim process easier.

#5 Don’t Repair without Informing:

Last but not least, do not send your car for repairs without getting a go-ahead from your insurer. This is because, after an accident, your car will be surveyed for the extent of damage it has suffered. Your insurer will give an approximate estimate of the expenses related to repairing this damage. Your claim can be rejected if you get your car repaired without a survey. Also, read: Mistakes to avoid when filing a car insurance claim

#6 Don’t Increase Consequential Loss:

Consequential loss occurs when you try to run the car after an accident. This is a major loss in terms of damage. For example, if your car is submerged in water and you try to start the engine. The car had already suffered water damage. But because you tried to start the car, additional water has affected the engine due to which the hydrostatic lock got activated. In this example, your insurer will pay only to cover the initial damage caused by the water and not the expenses related to the hydrostatic lock. This consequential loss claim will be rejected.

#7 Read the Terms and Conditions of Your Insurance Policy:

Upon receiving your policy document, it’s wise to read through the terms and conditions of the policy to know what is included and what is not. This will help you understand what damages are not included if a situation arises to claim for damages.

So keep in mind that insurance companies don’t reject or deny claims if you are claiming for the right reasons. Be careful and safe while you drive and buy car insurance to cover you and your car.

Reasons why your car insurance could be invalid

Apart from being a mandatory requirement, car insurance is also a great way of mitigating financial losses in case of vehicle damage. If you choose a Comprehensive Car Insurance Policy, you are covered under the law-mandated Third-party Car Insurance as well as an Own Damage Cover. However, you need to meet certain terms and conditions to be eligible for a car insurance claim. Thus, you must know the following reasons why your car insurance could be invalid at the time of raising a claim.

What is an invalid car insurance?

Invalid car insurance or an invalid car insurance policy is a terminology used to define a vehicle insurance policy’s status. Usually, invalid insurance comes into the picture when the motor insurance policy is purchased from an unauthorised seller, or the policy has expired.

The other case is at the time of claim settlement, where the insurer can reject the claim by stating, ‘car insurance invalid’. The following section focuses on cases where your car insurance cover could be invalid during claim settlement. For example, if you don’t meet the policy’s terms and conditions and raise a claim, the insurer (for example, ACKO) might state it as an invalid claim.

Few Reasons why your car insurance could be invalid

No one likes it when the insurer rejects the vehicle insurance claim. After all, you buy a wide-ranging insurance policy to receive financial support when it matters, right? Yes, you will receive financial support if you follow the rules and regulations. If not, then the claim could be rejected as the car insurance would be invalid in that scenario. Here are ten such scenarios for you to keep in mind.

1. Traffic rules

Following traffic rules is a crucial part of the car driving experience. Without traffic rules, there would be chaos! Therefore, you must follow traffic rules such as driving with a proper Driving Licence (DL), not driving in a No Entry zone, following the traffic signal, etc.

Breaking these traffic rules can get you in financial trouble by making you vulnerable to monetary penalties. It can also lead to car insurance claim rejection. Your claim can be rejected if it is found that you had broken traffic rules at the time of car damage or car accident.  

2. Car racing

No matter how exciting you might find driving your car at full speed, engaging in car racing won’t yield any benefits as far as car insurance is concerned. Your car insurance cover shall be deemed invalid in the case of a damage claim arising due to your involvement in car racing.

3. Fake claim

Car insurance is not a profit-making venture for you. It is a means to ensure timely financial support in case of vehicle damage or theft, as per the terms and conditions of the policy. Therefore, any instances of raising fake claims to earn a profit will not be entertained. Besides, there can be legal consequences to such fraudulent acts as well.

Note: The points mentioned above are for informational purposes. The actual scenarios for car insurance invalidity and claim rejection can vary from case to case. It’s best to discuss the same in detail with your insurer.

What are the consequences of invalid car insurance?

The major consequences of invalid car insurance are as follows:

  • Monetary penalties for driving a car with invalid car insurance.

  • Claim rejection and resultant financial loss due to invalid car insurance.

Frequently Asked Questions:

This section highlights FAQs related to car insurance, invalidity, and claims.

What should I keep in mind while buying car insurance online?

Nowadays, one can easily purchase car insurance online in India. However, one must be proactive when it comes to checking the credibility of an insurer before purchasing car insurance. People usually compare car insurance based on premium and coverage but they should also compare car insurance based on service offered and the insurer’s claim settlement reputation.

Is there a Grievance Redressal process in the car insurance industry?

If you feel that your claim has been rejected on unfair grounds, you can write to the insurance company’s grievance officer or the insurance ombudsman. Their contact details shall be mentioned in your policy document.

How to opt for online car insurance renewal?

Renewing car insurance online can help you to get the most suitable policy at a lower cost. Follow these steps to buy car insurance online: > Visit your preferred insurer’s website > Find the car insurance online page > Enter the details related to you, your car and your previous policy > Go through the coverage and exclusions thoroughly > Make payment If you renew your car insurance policy in time, you will get your new policy within minutes. You may be given an option to download the policy from the insurer’s website or it will be sent to your email ID or both.

How can I make sure that the policy I purchase is authentic and not invalid?

Purchasing car insurance via a certified insurer’s website (for example, www.acko.com) is a great way to ensure that your policy is authentic and not invalid.

How soon does a car insurance policy become invalid after its expiry date?

The car insurance policy becomes invalid as soon as it expires. For example, if the policy’s end date is March 4, it will become invalid on March 5 if it is not renewed on or before March 4. Thus, it’s best to complete the car insurance renewal process two weeks before the expiry date to avoid last-minute hassles.  

Can I renew an invalid car insurance policy post expiry without a car inspection?

Car inspection is at the insurer’s discretion. Usually, it depends upon the number of days post policy expiry. If a lot of days have passed post policy expiry, then the insurer might want to inspect the car before insuring it.

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