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11 reasons your motor insurance claim can be rejected

Recently, after a motorcycle accident in which the rider lost his life, the insurance company rejected the claim because it was a 346 cc bike. Apparently, as per the policy terms and conditions, the company was not liable to pay if the bike capacity was more than 150 cc. While this could be a case of misselling where the owner was not fully informed about the policy by the agent, there are various others reasons that claims can be denied. Typically car and two-wheeler owners do not read the poli ..

Ignorance about policy & add-on covers: A common reason for claim rejection and people’s grouse is that some specific damages are not covered under the policy and one needs to buy separate add-on covers for these. “For instance, engine damage or depreciation losses are not covered in the basic policy and you need separate engine protector and zero depreciation add-on covers for these,” says Tarun Mathur, CBO,

Commercial use of vehicle: If you have bought a car for personal use, but start using it for commercial purposes, the claim will be denied in case of an accident.

Concealment or wrong information: “If there are wrongful disclosures or material facts are not disclosed at the time of buying a policy, such as falsification of no-claim bonus or pre-existing damages, then the claim is bound to be rejected,” says Rakesh Jain, ED & CEO, Reliance General I ..

Modifications to the vehicle: If you install a CNG kit in your car, add accessories or make changes to the vehicle body, you will need to inform the insurer immediately, otherwise your claim in case of an accident will not be approved.

Policy guidelines: “If you do not comply with limitations of the use clause in your policy, the claim will be denied,” says Jain. So, if you are not driving within the specified geographical limits or if the vehicle does ..

Driving under intoxication: Another obvious reason for claim denial is drunken driving. Since it is illegal to drive under the influence of alcohol in India, any claim arising from an accident caused due to drunken driving will be rejected.

Delay in intimation: If you put off informing the insurer about the accident, there is a chance your claim will be denied. The time frame is small, generally 24-48 hours, and you must ensure that you intimate the insurer within this period.

Consequential loss due to depreciation: The damage due to a policyholder or third party’s action and not due to an uncertain event is not covered. “For instance, engine damage due to hydrostatic loss during monsoons is common. Here the damage does not happen because of flooding or rains, but because someone cranked up the car in a water-logged area. It won’t be covered by the insurer,” says Arora.

Voluntary deductible: “If you opt for a voluntary deductible to reduce your premium, you will have to pay the compulsory deductible amount plus a voluntary deductible amount at the time of every claim,” says Arora.

Mechanical or electrical breakdown: Motor insurance policies do not cover any mechanical or electrical problems.

Consumables: Things like engine oil or lubricants are not covered in the basic policy, neither are any plastic parts or tyres. Wear and tear: Any damage caused to the vehicle in the normal course of usage, say worn out tyres or tubes, are not covered.

Key /lock replacement: Today, cars have technologically advanced keys and keyless locking systems, which can be expensive to replace. It will be covered only if you have an add-on cover for the same.

Return to invoice: A basic policy will only fetch you the Insured Declared Value (due to depreciation) of the car, which is lesser than the on-road value of the car. You can bridge the gap with an add-on cover.


Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.


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