Common Reasons Why Motor Insurance Claims Get Rejected

Delay in Claim Intimation

Every insurer has a claim window from the time of the accident/event, within which the policyholder is supposed to file the motor insurance claim. This timeframe varies among insurers, with some insurers requiring claim intimation about the loss or damage within 48 hours of the incident or 7 days from the day of the event.

If the policyholder fails to raise a claim within this specific period, their claim may be rejected.

Fraudulent Claims

If the insurer detects a fraudulent claim or intentional damages caused to third parties or the insurer's own vehicle, the insurer will reject the motor insurance claim. A fraudulent claim could include staged accidents, inflating repair costs, claiming old damages or misrepresenting the cause of damages.

Damage Caused Due to Driving Under the Influence

Driving in a drunken state is a legal offense under the motor laws of India and any damage to your vehicle resulting from drunk driving will not be compensated for. If a policyholder is caught driving under the influence and causes damages/accidents, the insurer will outright reject the claim and the policyholder will be responsible for all liabilities and damages.

Driving Without a Valid Driving License

If you drive without a valid driving license and end up in accidents that damage your car or third-party property, the insurer will reject your motor insurance claim without a second thought. This is because no insurance companies support or encourage underage driving or driving without a valid driver's license.

All repair expenses have to be borne by the policyholder, as the insurer will not cover any damages or loss to your vehicle.

Violation of Policy Terms & Conditions

All insurance policies come with terms and conditions. If the policyholders violate any of the policy terms, the insurer has the right to reject their claims.

For instance, a personal vehicle cannot be used for commercial purposes. If a policyholder uses their personal vehicle for commercial activities, such as app-based taxi services and ends up damaging their ride. These damages would not be covered by the motor insurance provider.

Motor Insurance Policy Lapsed

You gain financial protection in exchange for premiums; however, failing to pay on time causes your policy to lapse. Similarly, if a motor policy expires and is not renewed, any subsequent damage or loss to your vehicle will not be covered. The policyholder would be responsible for paying for the repairs of their vehicle.

Motor Damage Not Covered Under Policy

All motor insurance policies come with certain exclusions. Even the most comprehensive plans may exclude specific damages or expenses. The insurance provider will not cover or compensate for these expenses. If you raise a claim for the excluded damage/expense, the insurer will reject it. For example, normal wear and tear of vehicles is not covered under most motor insurance policies.

Car Modified Without Informing the Insurer

If the policyholder modifies their vehicle without informing the insurer, and if the surveyor finds it during the car survey, the insurer may reject the claim.

Before buying motor insurance, you need to disclose all vehicle details and its conditions to your insurer. You must inform your insurer of any modifications or changes to the vehicle during the policy term to ensure full transparency.

Consequential Loss

Any loss or damage incurred due to damaged vehicle parts is called consequential loss. This type of loss is not covered under motor insurance; any claims raised for consequential loss will be rejected by the insurer.

For example, a broken axle causing damage to the car’s bodywork is not covered by motor insurance providers.

FAQs

Can using a private vehicle for ride-sharing lead to a claim rejection?

Yes, using your private vehicle for ride-sharing without commercial insurance can void your policy and lead to claim rejection in the event of an accident.

Does installing unauthorised tracking devices affect insurance claims?

Yes, installing unapproved GPS trackers or tampering with the vehicle’s electrical system can violate terms and lead to the rejection of insurance claims.

Will a lack of vehicle maintenance history cause claim issues?

If insurers suspect poor upkeep contributed to the damage, missing maintenance records can lead to suspicion and possible denial of your claim.

Can multiple small claims increase rejection risk for future ones?

Yes, frequent small claims may flag you as a high-risk individual, leading insurers to scrutinise or reject future claims more aggressively.

Is claim rejection possible if another driver uses your insured car?

If the driver was unauthorised or unlicensed, the insurer might reject the claim even if the vehicle was insured.