12 Common Reasons for Car Insurance Claim Rejection

Nothing in this world is damage-proof, including your car. You may have purchased your dream car after saving for years. However, it doesn't immune it from getting damaged. That is why you must have a comprehensive car insurance policy in place. But in some cases the insurers might reject the car insurance claim request. Let's find out the reasons for claim rejections.

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12 Common Reasons for Claim Rejection by Insurer

When you raise a car insurance claim, the insurance company decides to either approve or reject the claim. The decision is made based on the survey report of the surveyor and documents submitted by the insured.

Everything is merry if your claim is approved. However, your insurer can also reject your car insurance claim forcing you to bear the cost of repairing your car from your own pocket.

If you are wondering why the insurance company will deny a claim, take a look at the common reasons for rejection of car insurance claims-

1. If there is Delay in Claim Intimation

   Every motor insurance company has a specified time frame within which the policyholder is supposed to raise a car insurance claim.

   Some insurers require to intimate them about the loss or damage of the car within 48 hours of the incident or 7 days from the day of the accident/ event. If the claim is not raised within 7 days of the accident, then the claim can also be denied.

2. If Fraudulent Claims Are Raised

   The relationship between the policyholder and the motor insurance company is based on mutual trust.

   The car owner trusts the insurer to provide financial security to their vehicle in the event of damage or loss. Similarly, the insurer trusts the car owner to be honest and raise a genuine claim.

   In case the insurer finds it a fraudulent claim or intentional damages to the car, there can be comprehensive or third-party claim rejection.

3. If You Drive Your Car in a Drunken State

   Driving a car under the influence of alcohol is a legal offence under the motor laws of India. Going against the laws is never encouraged by any motor insurance company.

   If the car is damaged while the driver was driving it in a drunken state, the driver will be held responsible for the resultant accident.

   Therefore, if one is caught driving a car under the influence of alcohol or if he/she were drunk driving at the time of the accident, the insurer will reject the claim request without any second thought.

4. If You Drive Without a Valid Driving License

   The motor laws also state that every person driving a car should have a valid driving license. No motor insurance company promotes underage driving or driving without a valid DL.

   As a result, if the owner or the driver of the car does not have a valid driving license, then the insurer can reject motor insurance claim. Also, the insurer will not cover any loss or damages sustained by the car.

5. If You Violate Policy Terms & Conditions

   Every type of insurance comes with certain terms and conditions. Any violation of these terms and conditions can lead to the rejection of the claim by the insurer.

   For example, a personal car cannot be used for commercial purposes. If a personal car is used for commercial purpose and meet with an accident, the damages caused to the insured car will not be covered by the insurer.

6. If the Car Insurance Policy Has Lapsed

   Every car insurance policy has an expiry date. A car owner must renew their car insurance policy before the expiry date. Once the policy is lapsed or expired, the insurer is not obligated to cover the car damages. Therefore, the renewal of the policy on time is significant, as motor insurance providers can reject the car insurance claim on this basis.

7. If the Car Damage is Excluded in the Policy

   All car insurance plans come with some exclusions. The insurer does not provide any coverage for such situations or expenses mentioned under exclusions.

   If a claim is raised for the excluded situation, the insurer will reject it. Generally, normal wear and tear of the car are excluded under car insurance. If the claim is raised for these expenses, then the insurer has the right to deny the claim.

8. If the Car is Modified Without Informing the Insurer

   While buying a car insurance policy, a car owner has to provide details about their car and its condition. If any changes or modification is done to the vehicle during the policy tenure, the policyholder needs to inform the insurer about the same.

   If the policyholder does not notify them about the car modifications and the insurer finds out about it during the survey of the car before claim approval. In that case, they can reject a claim for non-disclosure of information.

9. If You Are Not the Owner of the Car You Drive

   The car owner and policyholder of car insurance must be the same person. An individual cannot raise an insurance claim for a car that they do not own.

   Even if they have purchased a second-hand car and the ownership transfer is still under process, they cannot raise a claim for the damages caused. If the claim is raised for a vehicle they do not own legally, the motor insurer can reject it.

10. If There Has Been a Consequential Loss

    When a car part is damaged, it can lead to loss or damage of other car parts. For example, the loss sustained by the car tyres while being towed to the garage after an accident. It is known as consequential loss and this is not covered under car insurance. Hence, any claim arising out of a consequential loss will be rejected by the insurer.

11. If Car Damages Result Out of Your Negligence

    A motor insurance company expects the car owner to take good care of their car. In case it gets damaged due to negligence, it becomes a prominent reason for claim rejection.

12. If the Car is Repaired Without Informing the Insurer

    If a car is damaged in an accident, it is advised not to repair it unless the vehicle has been inspected by the surveyor.

    If the car is repaired before the survey without informing the insurer, the car insurance claim can get rejected.

Final Call

A four-wheeler insurance policy is the best way to financially protect the car against various unforeseen incidents. Keep the above-mentioned reasons in mind to avoid getting the comprehensive or third-party car insurance claims rejected by the insurance provider.