When an Auto Insurance Claim is Rejected?

It is common for Auto insurance companies to reject large number of car insurance claims or to reduce there payment values. Generally they would do this, only if they have genuine reasons. Filing claims and receiving the monetary benefits could be a difficult task. There are several factors that can result in claims rejection:

  • The insurer may come to the conclusion that driver was largely or entirely at fault in case the claim is related to theft from the vehicle or of the vehicle itself. The car insurance policy may contain a clause which invalidates the claim.
  • The insurer may call off the claim if the information provided during application was inaccurate or false.
  • Another reason why a claim may get rejected is that the customer may have taken an insurance policy for a normal private car while it was actually used for commercial purposes. When a customer has a taxi, he should use a policy which is designed for taxis.
  • In case of partial damages, which occur as a result of accidents, a customer often gets claims lesser than demanded because of the depreciation of the vehicle. So, an insurance company puts a car back in the same position as it was prior to the damage of the vehicle. For example, if the engine of a five-year old Maruti car is damaged, the insurance company is liable to pay the customer equivalent to five year old engine. If it is replaced with the new one, then the depreciation is deducted as per the tariffs so as to bridge the gap between the cost of the new engine and five-year old engine.
  • If you are unable to provide receipts to backup claims of theft of items from your vehicle.
  • If the value of the car is considerably less than the money you've invested in restoration or enhancements.

In any insurance policy your insurer expects you to disclose all the information that could be of importance to them. You are obliged to do this even if the detail is not requested. This process is known as “utmost good faith”. Insurance companies often use this extremely wooly approach to sharing information to justify rejecting or downscaling claims. If such situations arise with your car insurance claim, there are certain important points to remember:

  • The small print of your policy carries a lot of weight, read it thoroughly before, during and after your claim.
  • Keep the accurate records of conversations and correspondence along with all the receipts backing up your claim.

The payout figure announced by your insurance company is not a set in stone. Rather than just accepting the amount on offer you are perfectly entitled and rightful to question the payout. And you can put forward your case for why it should be increased.

Written By: PolicyBazaar - Updated: 10 June 2020
You May Also Like
  • Best Car Insurance Companies in India

    Best Car Insurance Companies in India Getting motor insurance is essential for all the car/vehicle owners and drivers in India. It is mandatory to have third party car insurance in India under the Motor Vehicle Act, 1...

    read more
  • Insured Declared Value (IDV)

    Insured Declared Value (IDV) Insured Declared Value (IDV) is the maximum Sum Assured fixed by the insurer which is provided on theft or total loss of vehicle. Basically, IDV is the current market value of the vehicle....

    read more
  • Zero Depreciation Car Insurance

    Zero Depreciation Car Insurance In a zero depreciation policy the insured gets the total cost of the damage or loss that is caused to the insured car. The depreciation value of the replaced or damaged parts is usually...

    read more
  • No Claim Bonus (NCB) in Car Insurance

    No Claim Bonus (NCB) in Car Insurance No Claim Bonus (NCB) is a reward, given by an insurer to a policyholder for making no claims during the policy term. No Claim Bonus can be accumulated as a discount on the premium...

    read more
  • 9 Secrets That Your Motor Insurance Provider Won’t Tell You

    9 Secrets That Your Motor Insurance Provider Won’t Tell You Due to the dangerous driving conditions, it is compulsory to have third party insurance for every vehicle plying on Indian roads. It ensures the overall sa...

    read more
Search
Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.
Calculate your car IDV
IDV of your vehicle
Calculate IDV
Calculate Again

Note: This is your car’s recommended IDV as per IRDAI’s depreciation guidelines.asdfsad However, insurance companies allow you to modify this IDV within a certain range (this range varies from insurer to insurer). Higher the IDV, higher the premium you pay.Read More

Policybazaar lets you compare premium prices from 20+ Insurers!
Compare Prices