A car accident is always distressful situation for the car owner. Not only is there the risk of physical injury and the inevitable damage to your car, but the possibility of the insurance company rejecting your claim is also a cause of aggravation. It is common for insurance companies to reject claims, but in most situations they have genuine reasons to reject the claim. In this article, we will discuss the reasons for insurance companies to reject car insurance claims. Different automobile insurance policies may have different clauses. Therefore, you should read the policy document carefully, to make sure that you understand your rights and obligations. Here are ten general reasons why your accident claims can be rejected.
- Car insurance applies, only in the case of accidents. If a part of your car fails due to natural wear and tear, then it is not covered under car insurance.
- Any consequential damage is not covered. Consequential damages are an indirect result of a direct loss. How does it apply in case of automobile insurance? Let us understand with a couple of examples. Let us suppose, your parking spot is in a low lying area and has been flooded due to rains. Car insurance will cover any damage to the car caused by flooding. However, if the driver starts the car despite the engine being flooded causing an engine failure, then the cost of engine repair will not be covered. Let us take another example. If your car meets with an accident causing engine oil leakage and despite the accident, if you start your car causing an engine seizure, then it will not be covered. Similarly, if your gear oil is leaking and yet you put your car on drive causing your gear box to fail, it will not be covered.
- If you had bought an automobile insurance policy for your personal use and you are using your car for commercial purposes, e.g. taxi service, then your insurance claims may be rejected. If you intend to use your car for commercial purposes, then you should buy a commercial car insurance policy.
- Your car insurance claim may be rejected, if during the accident, the driver was under the influence of intoxicants like alcohol or drugs.
- If you delay reporting an accident to your car, your insurance claim may be rejected. Normally, insurers allow a 48 hour window for accident to be reported. Some insurers may allow some relaxation in the timeframe during which accidents can be reported, but beyond a certain time limit, they may reject the claim. You should report your accident to your insurance company, immediately after an accident.
- If you buy a second hand car and the automobile insurance has not been transferred to your name, the insurance company may reject your claim, if the name on the registration certificate (RC) does not match with the name on the automobile insurance policy. Some insurance companies may have a grace period, but it is always a good idea to get the seller to endorse his car insurance policy in your name immediately after you get the registration transferred in your name.
- In case of partial damages on account of an accident, the insured often gets claims lesser than what is submitted because of the depreciation of the vehicle. For example, if the engine of your seven-year old car is damaged in an accident, the insurance company financial obligation is limited to the equivalent cost of a seven year old engine. However, if your damaged engine is replaced with a new one, then the depreciation is deducted from the claim, and you will have to pay the balance amount.
- The insurance company may reject your claim, if an accident or theft happened beyond a single day after expiry of the policy.
- The insurer may reject your claim related to the theft of the vehicle or items within, if it determines that driver was largely at fault with regards to the failure to prevent the theft. Furthermore, the insurance company may reject your claims of theft of items from your vehicle, if you are unable to provide receipts to backup your claims.
- The insurance company may reject your claim if the accident occurs outside the geographical area as defined in the policy. There two geographical zones for automobile insurance, as defined by the IRDA. Zone A, which covers the metro cities, like Delhi, Mumbai, Kolkata and Chennai, and Zone B, which covers the rest of India. Normally, automobile insurance is applicable throughout the country. Yet, you should verify the same in your car insurance policy.
In this article, we have discussed some general reasons why your car insurance claims can be rejected. Not all of this may apply to you. So you should read your insurance policy wording very carefully to fully understand under what conditions your claims may be rejected.