What to Do If Your Motor Insurance Claim Is Denied

4 min read | Updated on May 27, 2025, 14:23 IST

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Atul had recently modified his SUV and replaced the stock 18-inch alloys with the 20-inch aftermarket options. He also made a few adjustments to the vehicle's suspension, which made it appear even more bulky and rugged. While coming back from his farmhouse on a sultry afternoon, he encountered an engine failure. As he had taken RSA (Roadside Assistance) as an add-on in his motor insurance policy, he quickly called the helpline for help. His car was towed and taken to the nearest workshop.

After the primary inspection, the insurance company rejected the claim, citing that Atul had made unauthorised modifications to the car, which were not notified to the regional RTO or the insurance company. Atul argued that the modifications were related to tyres and suspension and had nothing to do with the engine performance. He had little idea of the future course of action, as a claim denial was nowhere in his mind.

Vehicle owners in India pay a substantial amount of money as insurance premiums to ensure that the insurer covers various stated circumstances, and they are financially protected in the event of accidents and mishaps. Suppose someone opts for a comprehensive motor insurance policy with numerous add-ons, and such a claim is rejected for any reason. In that case, the vehicle owner is likely to feel cheated, as the rejection not only brings monetary loss but also emotional stress, confusion, and a sense of helplessness.

Regardless of whether the rejection is based on a technicality or an overlooked policy clause, the outcome is always frustrating for a car or bike owner. Let us walk you through different situations when a motor insurance claim can be denied and what your options are in such conditions.

Common Reasons for Claim Denial

Here are some of the common reasons for denial of a motor insurance claim:

Delayed Intimation

This is quite common, as people often start repair work in a rush without informing the insurance company. There is a stipulated time for intimation (24-48 hours after the incident), which can lead to outright rejection.

Invalid or Expired Driving License

If the driver didn’t hold a valid driving license at the time of the incident, the claim becomes void.

Driving Under the Influence

Claims are denied if the accident occurred while the driver was under the influence of alcohol or drugs.

Policy Lapse

If your policy lapsed due to non-payment, your claims will be outrightly rejected.

Undisclosed Modifications

As in the case discussed at the beginning of this article, if the vehicle has been modified and these changes were not declared, the insurer may reject the claim on the grounds of misrepresentation.

Using Private Vehicle Commercially

Using a privately insured vehicle for commercial purposes (like goods transport or ride-sharing) invalidates the policy coverage. So think twice before giving your bike or car to someone in exchange for rent, as it is considered a commercial activity.

Fraudulent or Inflated Claims

Any exaggeration or fabrication in the damage report can be grounds for denial, and may also lead to blacklisting.

Repairs Without Insurer Approval

You should wait for the inspection before starting any repairs for a cashless claim or getting a reimbursement.

Excluded Events

Damages resulting from regular wear and tear, mechanical failures, or events not covered under the policy are typically not eligible for claims.

Immediate Steps After Claim Denial

Here are the steps you should take as soon as the insurance company rejects your motor insurance claim:

Review the rejection notification to understand the actual cause of the denial.
Compare the reason stated in the intimation with your policy document to check for any mismatch or misinterpretation.
Collect all relevant documents, including the FIR, repair estimates, damage photos, and claim forms.
Start having a document trail, such as email, WhatsApp messages, and record calls and letters exchanged with the insurer for future reference.

How to Appeal the Decision

If you feel that the denial is incorrect, you can appeal against it. Here are the measures you can take:

Step	Action	Details
Contact the Insurer’s Grievance Officer	File a Written Appeal	Attach denial letter, supporting documents; expect response in 14 days
Escalate to IRDAI	Use Bima Bharosa platform or email	Visit www.irdai.gov.in, or email complaints@irdai.gov.in
Approach Insurance Ombudsman	File a complaint within a year	Free resolution for claims under ₹30 lakh
Legal Recourse	Consult a consumer court/lawyer	This should be the last remedy for unfair denials.

Preventive Measures to Avoid Claim Denial

As a responsible and vigilant vehicle owner, you should take all necessary steps to help avoid claim denial. Here are a few things you should keep in mind:

Renew On Time

Do not let your policy lapse. Use reminders to avoid missing deadlines.

Be Transparent

Provide a complete list of modifications, changes, and improvements made to the vehicles, no matter how insignificant they might sound.

Stick to the Rules

Always follow the rules in your policy.

Report Promptly

Inform your insurance company as soon as you meet with an accident or wish to claim damages (within 24 hours).

No Unauthorised Changes

Never use a private vehicle for commercial purposes.

Summing Up

When you purchase a new insurance policy or renew an existing one, it is essential to review the policy terms and conditions carefully. You should have a clear idea about the inclusions and exclusions of your motor vehicle insurance policy to avoid any surprises during claims. However, there are appropriate measures in case you feel that the rejection was unjustified.

Whether it's appealing the decision or avoiding such issues in the future, being informed is your best protection. Always read the fine print, maintain clear communication with your insurer, and don’t hesitate to escalate if you feel your claim was unfairly rejected.

FAQs

Why was my motor insurance claim denied?

Likely due to policy lapses, delayed reporting, or policy violations.

Can I appeal a denied insurance claim?

Yes, through the insurer’s grievance process, IRDAI, or the Ombudsman.

What is the role of the Insurance Ombudsman?

It offers free resolution for claims under ₹30 lakh within a year of denial.

Can legal action be taken if appeals fail?

Yes, you can approach a consumer court or file a legal suit.

How can I avoid claim denials in the future?

Renew on time, follow policy terms, report incidents quickly, and disclose all details honestly.

About Author

Upstox Desk

Team of expert writers dedicated to providing insightful and comprehensive coverage on stock markets, economic trends, commodities, business developments, and personal finance. With a passion for delivering valuable information, the team strives to keep readers informed about the latest trends and developments in the financial world.