Reasons for Car Insurance Claim Rejections - How to Claim Successfully

Generally, a car insurance claim is rejected when it is reported after a significant delay, the person making the claim does not have a valid driving license, the insured vehicle is used in a manner that is not allowed under the policy, the claim turns out to be fraudulent, the policy has expired, or the claimant has not followed the claim procedures properly.
It is to be noted that, in most instances, claims are not arbitrarily rejected. Insurers usually refuse them when the policy conditions, the laws or the documentation requirements have not been adhered to.
Knowing these reasons will not only save you from getting rejected but will also make the claim settlement process easier for you when the time comes.

Contents

• 10 Reasons Why Claims Get Rejected by Insurers
  • 1. Delay in Informing the Insurance Company
  • 2. Driving Without a Valid Licence
  • 3. Driving Under the Influence (Drunk Driving)
  • 4. Policy Lapse or Expired Insurance
  • 5. Fraudulent or False Claims
  • 6. Violation of Policy Terms
  • 7. Not Following Proper Claim Procedure
  • 8. Missing or Wrong Documentation
  • 9. Mechanical Failure or Wear and Tear
  • 10. Illegal or Negligent Use of Vehicle
• Tips to Prevent Car Insurance Claim Rejection:
  • #1 Inform Your Insurance Company:
  • #2 Report to the Police and File an FIR:
  • #3 Provide All Relevant Documents to Your Insurance Company:
  • #4 Have Proof of Damages:
  • #5 Don’t Repair without Informing:
  • #6 Don’t Increase Consequential Loss:
  • #7 Read the Terms and Conditions of Your Insurance Policy:
• Reasons why your car insurance could be invalid
• What is an invalid car insurance?
• Few Reasons why your car insurance could be invalid
  • 1. Traffic rules
  • 2. Car racing
  • 3. Fake claim
• What are the consequences of invalid car insurance?
• Frequently Asked Questions:

10 Reasons Why Claims Get Rejected by Insurers

In order to avoid your claim being rejected, you should know the reasons for car insurance claim rejections. Here are a few reasons on the basis of which your car insurance claim can be denied:

1. Delay in Informing the Insurance Company

Late reporting of claims is one of the most frequent reasons for claim denial.

The majority of insurance companies will expect you to notify them of an accident:

• Within 24, 48 hours or

• Up to 7 days, depending on the policy

In case you postpone:

• The proof gets murky

• The insurer will have difficulties in checking the case

• They will become more suspicious

2. Driving Without a Valid Licence

If the driver does not have a valid driving licence at the time of the accident, the claim is usually rejected.

This includes:

• Expired licence

• Learner’s licence without supervision

• Driving a vehicle type not authorised

Driving without a licence violates both law and policy terms, making the claim invalid.

3. Driving Under the Influence (Drunk Driving)

Insurance companies categorically refuse to entertain claims in cases where the driver:

• was under the influence of alcohol

• was under drugs or intoxicants

Besides being a punishable offence, the law also mandates that insurers shall not bear the cost of any damage resulting from operating a vehicle while under the influence of these substances.

4. Policy Lapse or Expired Insurance

In case your insurance policy has expired:

• You will not have any coverage

• All claims filed in that period would be refused

One of the leading causes of claim rejection in India is expired policies. 

5. Fraudulent or False Claims

A life insurance policy is essentially a contract of trust. If an insurance company learns of any of the following, the claim will be denied immediately.

• Making up accidents

• Overstating the losses

• Damaging on purpose

Besides, submitting a false claim may also result in:

• Your insurance policy being cancelled

• You being taken to court

6. Violation of Policy Terms

Each insurance contract comes with a set of conditions. In certain cases, claims are declined when you:

• Operate a private vehicle for commercial use

• Fail to meet the policy conditions including use of the vehicle

• Disregard the terms laid down

Insurance companies will refuse claims if the terms of the policy contract are breached.

7. Not Following Proper Claim Procedure

Many claims are denied because the proper procedure was not followed.

Common errors:

• Fixing the vehicle prior to notifying the insurance company

• Refusing inspection

• Getting work done at non-approved garages

Before releasing funds for a claim, insurers require an evaluation of the damage.

8. Missing or Wrong Documentation

A claim must have enough evidence. Lack of documents may result in a denial.

Commonly required documents are:

• FIR (if necessary)

• Pictures of the damage

• Bills for repairs

• Policy information

If the right paperwork is not available, it is impossible for the underwriters to authenticate the claim.

9. Mechanical Failure or Wear and Tear

Car insurance does not cover:

• Engine failure due to wear and tear

• Mechanical breakdown

• Regular maintenance issues

These are considered non-insurable risks, not accidents.

10. Illegal or Negligent Use of Vehicle

Claims may also be rejected if:

• The vehicle was used for illegal activities

• Traffic rules were violated

• The driver acted negligently

Insurance covers accidents, not avoidable risks.

Tips to Prevent Car Insurance Claim Rejection:

Now that you know the reasons for claim rejection, let’s learn how to claim car insurance successfully.

#1 Inform Your Insurance Company:

The first step is to inform your insurance company about the incident. You can inform them through a phone call, email, or a mobile app.

#2 Report to the Police and File an FIR:

An FIR is a must in case of theft or major accident, especially important in case of third-party accidents resulting in death or bodily injuries. File an FIR in the case of theft of your car immediately.

#3 Provide All Relevant Documents to Your Insurance Company:

Ensure to send all relevant documents to your insurer without any delay. Your insurance company will begin the process of claim only after receiving all relevant documents. Documents such as Registration Certificate, Driving License, claim form, etc. are usually required while raising a claim.

#4 Have Proof of Damages:

It’s better to take pictures of damages to your car as well as the third-party’s vehicle if a third-party is involved in the incident. While your insurance company will send an authorised person to inspect the damages, it’s always advisable to gather proof so it makes the claim process easier.

#5 Don’t Repair without Informing:

Last but not least, do not send your car for repairs without getting a go-ahead from your insurer. This is because, after an accident, your car will be surveyed for the extent of damage it has suffered. Your insurer will give an approximate estimate of the expenses related to repairing this damage. Your claim can be rejected if you get your car repaired without a survey. Also, read: Mistakes to avoid when filing a car insurance claim

#6 Don’t Increase Consequential Loss:

Consequential loss occurs when you try to run the car after an accident. This is a major loss in terms of damage. For example, if your car is submerged in water and you try to start the engine. The car had already suffered water damage. But because you tried to start the car, additional water has affected the engine due to which the hydrostatic lock got activated. In this example, your insurer will pay only to cover the initial damage caused by the water and not the expenses related to the hydrostatic lock. This consequential loss claim will be rejected.

#7 Read the Terms and Conditions of Your Insurance Policy:

Upon receiving your policy document, it’s wise to read through the terms and conditions of the policy to know what is included and what is not. This will help you understand what damages are not included if a situation arises to claim for damages.

So keep in mind that insurance companies don’t reject or deny claims if you are claiming for the right reasons. Be careful and safe while you drive and buy car insurance to cover you and your car.

Reasons why your car insurance could be invalid

Apart from being a mandatory requirement, car insurance is also a great way of mitigating financial losses in case of vehicle damage. If you choose a Comprehensive Car Insurance Policy, you are covered under the law-mandated Third-party Car Insurance as well as an Own Damage Cover. However, you need to meet certain terms and conditions to be eligible for a car insurance claim. Thus, you must know the following reasons why your car insurance could be invalid at the time of raising a claim.

What is an invalid car insurance?

Invalid car insurance or an invalid car insurance policy is a terminology used to define a vehicle insurance policy’s status. Usually, invalid insurance comes into the picture when the motor insurance policy is purchased from an unauthorised seller, or the policy has expired.

The other case is at the time of claim settlement, where the insurer can reject the claim by stating, ‘car insurance invalid’. The following section focuses on cases where your car insurance cover could be invalid during claim settlement. For example, if you don’t meet the policy’s terms and conditions and raise a claim, the insurer (for example, ACKO) might state it as an invalid claim.

Few Reasons why your car insurance could be invalid

No one likes it when the insurer rejects the vehicle insurance claim. After all, you buy a wide-ranging insurance policy to receive financial support when it matters, right? Yes, you will receive financial support if you follow the rules and regulations. If not, then the claim could be rejected as the car insurance would be invalid in that scenario. Here are ten such scenarios for you to keep in mind.

1. Traffic rules

Following traffic rules is a crucial part of the car driving experience. Without traffic rules, there would be chaos! Therefore, you must follow traffic rules such as driving with a proper Driving Licence (DL), not driving in a No Entry zone, following the traffic signal, etc.

Breaking these traffic rules can get you in financial trouble by making you vulnerable to monetary penalties. It can also lead to car insurance claim rejection. Your claim can be rejected if it is found that you had broken traffic rules at the time of car damage or car accident.  

2. Car racing

No matter how exciting you might find driving your car at full speed, engaging in car racing won’t yield any benefits as far as car insurance is concerned. Your car insurance cover shall be deemed invalid in the case of a damage claim arising due to your involvement in car racing.

3. Fake claim

Car insurance is not a profit-making venture for you. It is a means to ensure timely financial support in case of vehicle damage or theft, as per the terms and conditions of the policy. Therefore, any instances of raising fake claims to earn a profit will not be entertained. Besides, there can be legal consequences to such fraudulent acts as well.

Note: The points mentioned above are for informational purposes. The actual scenarios for car insurance invalidity and claim rejection can vary from case to case. It’s best to discuss the same in detail with your insurer.

What are the consequences of invalid car insurance?

The major consequences of invalid car insurance are as follows:

• Monetary penalties for driving a car with invalid car insurance.

• Claim rejection and resultant financial loss due to invalid car insurance.

Frequently Asked Questions:

This section highlights FAQs related to car insurance, invalidity, and claims.

What are the common reasons claims get denied by car insurers?

Car insurance claims are mostly declined if the insurance company is informed about the loss at a very late stage, the vehicle is driven with an invalid or no driving licence, insurance premium payments are not made regularly, the vehicle is modified in a way that is not authorised in the policy, a vehicle insured for personal use is used for commercial purposes, relevant documents are outdated, or a person is not willing to cooperate during the investigation.

What should I keep in mind while buying car insurance online?

Nowadays, one can easily purchase car insurance online in India. However, one must be proactive when it comes to checking the credibility of an insurer before purchasing car insurance. People usually compare car insurance based on premium and coverage but they should also compare car insurance based on service offered and the insurer’s claim settlement reputation.

Is there a Grievance Redressal process in the car insurance industry?

If you feel that your claim has been rejected on unfair grounds, you can write to the insurance company’s grievance officer or the insurance ombudsman. Their contact details shall be mentioned in your policy document.

How to opt for online car insurance renewal?

Renewing car insurance online can help you to get the most suitable policy at a lower cost. Follow these steps to buy car insurance online: > Visit your preferred insurer’s website > Find the car insurance online page > Enter the details related to you, your car and your previous policy > Go through the coverage and exclusions thoroughly > Make payment If you renew your car insurance policy in time, you will get your new policy within minutes. You may be given an option to download the policy from the insurer’s website or it will be sent to your email ID or both.

How can I make sure that the policy I purchase is authentic and not invalid?

Purchasing car insurance via a certified insurer’s website (for example, www.acko.com) is a great way to ensure that your policy is authentic and not invalid.

How soon does a car insurance policy become invalid after its expiry date?

The car insurance policy becomes invalid as soon as it expires. For example, if the policy’s end date is March 4, it will become invalid on March 5 if it is not renewed on or before March 4. Thus, it’s best to complete the car insurance renewal process two weeks before the expiry date to avoid last-minute hassles.  

Can I renew an invalid car insurance policy post expiry without a car inspection?

Car inspection is at the insurer’s discretion. Usually, it depends upon the number of days post policy expiry. If a lot of days have passed post policy expiry, then the insurer might want to inspect the car before insuring it.

 

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