Motor insurance: Claim rejection remains a big worry; can be avoided with a little caution

However, while it is mandatory for all vehicles to be insured, claim rejection is one of the biggest issues faced by customers.

By: ENS Economic Bureau | Ahmedabad/gandhinagar/new Delhi, New Delhi | Updated: December 4, 2015 6:05:01 pm

The growth of the motor insurance business has been synonymous with the growing sales of vehicles in the country, especially the car sales. The Motor Vehicles Act makes it mandatory for all vehicles to have the minimum insurance cover— Third Party Insurance — that protects a policy holder against losses arising due to injury/death to a third party or any damage to property. In line with the same, for the seven-month period between April and October of the financial year 2015-16, motor insurance accounted for over 42 per cent (Rs 23,480 crore) of the total premium income underwritten by the general insurance companies. Health Insurance comes second with a share of 25 per cent of the total premium income.

However, while it is mandatory for all vehicles to be insured, claim rejection is one of the biggest issues faced by customers. It is not uncommon for insurance companies to reject claims, but in many cases, there are genuine reasons for such rejections which customers are unaware of. While most insurance companies do not cover mechanical breakdown, consequential loss, depreciation, wear and tear, any contractual liability and intoxicated driving, here is a list of reasons why a company can reject your insurance claim.

Dos and Don’ts 

1. The claim is rejected if the customer gets the car repaired on his own after an accident and then intimates the insurance company about the settlement.

2. The insurer may reject the claim related to theft of the vehicle or items within, if it determines that driver was largely at fault and failed to prevent the theft.

3. The insurance company may reject your claim, if an accident or theft happened beyond a single day after expiry of the policy.

4. The insurance company may also reject the claim if the accident occurs outside the geographical area as defined in the policy. There are two geographical zones for automobile insurance, as defined by the IRDAI – zone A and zone B. While zone A covers metro cities such as Delhi, Mumbai, Kolkata and Chennai, zone B covers the rest of India. While normally, automobile insurance is applicable throughout the country, the insured should ensure that his/her insurance policy has the same.

5. The driver driving the insured car at the time of accident should not only have a valid driving license and he/she also needs to notify the claim within specified time which is usually between 48 hours and 72 hours.

6. The claim is also likely to be rejected if the car is registered as private vehicle and is used for commercial purpose.

7. Also in specific cases where a car is parked in a no parking zone or loaded with passenger more than the seating capacity, the insurance company can reject the claim.

8. Also if the driver is under the influence of intoxicants like alcohol or drugs, the claim is liable to get rejected.

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