Suppose, you buy a brand new car. You are aware that to drive legally in India, it is mandatory to buy an appropriate car insurance policy. So you purchase a suitable coverage and duly pay all the insurance premiums. Unfortunate One day, during the policy period, your car meets with an accident and the bonnet gets damaged. You immediately raise a claim. Now, it is natural for you to expect your claim to get smoothly approved. However, for some reason, your claim gets rejected, and that situation is frustrating, disappointing, and costly. So why did this happen to you?
While buying a policy, as much as it is important to learn about the claim settlement process, it is also important to know when and why your car insurance claim can get rejected.
Let’s take you through the whole process, so you never have to face such a situation.
What is a Claim in Car Insurance?
A claim can be termed as a formal request made by an insured person to the insurer to provide them with financial assistance at the time an accident or mishap. Since you have paid the insurance premiums, it is your right to file a claim when involved in an accident.
Two important facets of insurance are trust and complete disclosure. It is, thus, important to inform the insurer about the accident damages caused to the car, at the earliest.
Claims can be made either on a cashless or reimbursement basis.
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Cashless Claim
A cashless claim is where the claim amount is directly paid by the insurance company to a network garage, where your insured vehicle is being repaired.
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Reimbursement Claim
A reimbursement claim is where the vehicle is repaired in a non-network garage, and the amount needs to be paid upfront by you as the customer, which later gets reimbursed.
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Reasons Why Your Car Insurance Claims May Get Rejected
As a customer, you should know the reasons for claim rejections, so that such situations can be averted. Here are some grounds on the basis of which your car insurance claim may be denied:
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If You Make A Fraudulent Claim
If you damage your car intentionally and raise a fraudulent claim, then the insurer has the right to reject it. An insurance company cannot be duped and used for making a profit, and hence, any claim made intentionally just to get the money out of the policy will not be entertained by the insurer.
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If You Drink And Drive
Drunk driving is a legal offence. Every claim raised post-accident is investigated by the insurer. If they find the insured person was under the influence of alcohol and that led to the accident, the claim will not be accepted.
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Driving With An Invalid Licence
As per the law, a driving licence is mandatory if you are driving a car on the public roads. If you drive without carrying a valid one, the insurer is not liable to pay for your damages, and the claim will get rejected.
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If The Car Is Modified Without Intimation
At the time of buying an insurance policy, you are required to provide every detail related to the car, like engine capacity, alloys, car condition, etc. During the policy tenure, if any modifications are made to the car without informing the insurer, and you meet with an accident, there are chances of either the parts not being covered or the claim getting rejected.
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Delay In Claim Intimation
Every insurer has a predefined time span for claims to be made. If you don’t adhere to the same, or fail to inform the insurer about the losses or damage, then the insurer can reject the claim. It is important to register the claim within 24-48 hrs or as early as possible. If there is a delay you must provide a valid reason for the delay.
For example, say you have a flight to catch. While travelling to the airport, you meet with an accident which leads to a dent on the hood as well as some scratches on the door. You are in a hurry and so, you decide to claim for the same post your return. Now when you raise the claim, your insurance company will ask you the reason for the delay. You can inform them about your travel plans. The insurer may ask you to submit your travel details and tickets. If you fail to submit the required documents, the claim might get rejected.
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If Car Is Repaired Without Intimation
It is important to get the car surveyed by the surveyor appointed by the insurance company before any repair work is done to the car. If you get your car repaired post-accident without informing the insurer, then the insurer may decline your claim.
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Old Damages
Insurers won’t pay for the old damages in your car. So, if there are any pre-existing damages in your car due to an old accident, the insurer will not cover them. The chances of such claims being rejected are high.
For example - You meet with an accident that results in damage to the hood and you raise a claim accordingly. You also try to claim for the damages caused to the rearview mirror of the car, which happened a few months ago. The insurer will refuse to cover the rearview mirror or reject the claim if they find it to be invalid.
Please note that you will have to inform the insurer immediately about the damages caused to the car. You will not be able to claim for damages that were caused as a result of two different accidents. In such scenarios, insurers will only cover recent damages after verifying the details.
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Claims Arising Out Of Consequential Losses
When you use a car post-accident and it gets damaged further will be considered as consequential damages For example, damages caused to car tyres while the car was being towed after an accident. Such losses will not be covered by the insurance company.
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Lapsed Policy
Every motor policy comes with an expiry date. You have to renew the policy to remain covered. If you miss an insurance renewal and you meet with an accident, the insurer will not be liable to pay for your claim.
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If You Don’t Own The Car You Drive
This is extremely important if you are buying a second-hand car. You will have to make sure that you get the car transferred on your name before purchasing the policy on your name. This means the Registration Certificate (RC) should be transferred on your name. Both the policy and the RC should have the same name, only then the claim will be payable.
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Non-Disclosure
Non disclosure of information can also lead to rejection of the claim. If you don’t disclose all information related to the car at the time of buying the policy or applying for the claim, your claim will not be taken up. For instance, non-disclosure may include not informing the insurer about hypothecation, any parts added to the vehicle due to which the accident happened, etc.
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Damage Due To Negligence
If any damage occurs to your car because of your negligence, it may lead to a rejection of the claim. This may include situations like driving in a flooded area, leaving the car keys in the car unattended for long hours, etc.
For example - You visit your friend’s house and as there is no parking space, you park your car outside the house. You forget to remove the keys from the car and when you return after an hour, you find your car to be missing. This happened because you left the keys in the car and the car was unattended for a long period. This will be considered as negligence from your end and will be the reason for rejection of the claim.
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Incorrect NCB
You will have to declare the correct NCB while purchasing the policy. This is because insurers verify the NCB with the previous insurer post the policy is purchased. Say the past insurer did not validate/respond the same and there is a discrepancy found at the time of claims, insurers can reject the claims. Hence ensure you declare carefully.
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So, these are some of the important things you should keep in mind so that you can avoid claim rejection. These factors may vary from insurer to insurer, which is why it is necessary to read the T&Cs in the policy thoroughly before purchasing it.
