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Reasons Why Car Insurance is Rejected Research Team | Posted On Friday, June 07,2019, 06:13 PM

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Reasons Why Car Insurance is Rejected



Do you own a car? If yes, have you bought a car insurance policy for your vehicle? Third Party Liability Insurance is compulsory in India. A car insurance plan, also known as motor insurance policy, is availed to safeguard your car from unexpected risks.

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Reasons Why Car Insurance is Rejected

The car insurance policy covers losses due to theft, damage to the car in an accident/collision or non-collision physical damage suffered in a storm or breaking of the windshield. Car insurance policies are of several types and the premium depends on classification of the vehicle market value of the car, the category of coverage and so on. Even though you have a car insurance policy, you may not be able to make a claim due to the following reasons:

  • No claims can be made if an accident takes place due to careless driving. If you do not hold a valid driving license and were driving under the influence of alcohol at the time of the accident, insurance companies will deny the claim.
  • If a policyholder fails to produce the photograph of injuries and damages caused by the accident, the insurance company may deny the claim.
  • A car insurance policy has to be active at the time of the claim. It remains active if you pay the premiums on or before the due date. A lapsed or an inactive car insurance policy leads to claim rejection.
  • Insurance companies ask you to produce vehicle-related details while issuing a policy. In case of incorrect or false details, the policy stands invalid and insurers will not honor the claim.
  • Each insurance company has its own terms and conditions. In case of an accident, the insurance company should be kept informed as early as possible and the claim must be made within 2-3 business days. If no claim is made prior to the deadline, the claim may be rejected.

See Also: Zero Depreciation Car Insurance

  • If you purchase a pre-owned car, the car insurance plan has to be transferred to your name in addition to the Certificate of Registration. If the policy has not been transferred or if there is a mismatch in details, the claim is likely to be denied.
  • As per the Insurance Regulatory and Development Authority (IRDA), geographical areas have been clustered into 2 categories, which include Zone A for metro cities like Delhi, Mumbai, Kolkata and Chennai and Zone B for other cities. If an accident takes place outside the prescribed limits, the claim is denied.
  • Car insurance policies do not normally cover the depreciation (wear and tear).
  • Policies are also rejected in case of consequential damages which are the instances where a certain part of your car gets damaged due to contact with another part.  
  • Insurers retain the right to change or cancel the policy by providing valid reasons, which could be the non-disclosure of requisite information or the non-payment of car insurance premiums.
  • Car insurance policies have certain exclusions. For instance, if a car is left unlocked and someone steals something from the car, the claim is not honored.
  • If your car is not roadworthy, parked at a non-parking area or used for commercial purposes, the claim is rejected.

See Also: Why You Need A Comprehensive Car Insurance Coverage?

Car users must read and understand the terms and conditions to ensure a hassle-free claim. While buying a car insurance policy, opt for a third-party liability cover which is mandatory according to the Indian Motor Vehicles Act and the Indian Road Safety Act. Shop around for an all-inclusive cover called a comprehensive car insurance plan, which also covers own damage. Check your risk profile and select a car insurance policy accordingly.

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