You may be aware of the standard exclusions that the policy comes with. But here are some of the less known reasons, behind auto insurance claim rejection.
Third party motor insurance is a must in India and all vehicle owners are expected to buy one before getting their vehicle on the road. In most of the cases, the motor insurance covers also pay for self-damage along with third party damage. However, just because you have bought a wholistic motor insurance policy, do not expect the insurer to pay the claim. You may be aware of the standard exclusions that the policy comes with. But here are some of the less known reasons behind auto insurance claim rejection.
Insurance policy not in your name
This can be a deciding factor when you have bought a pre-owned vehicle but have forgotten to transfer the policy in your name. Many first time car buyers in India prefer a second hand car. While they ensure that the car-registration changes from the original owner to their name, the car insurance policy is ignored. If at the time of mishap, the auto insurance policy is not in the current owner’s name, the insurer has the right to refute the claim.
Not using the car for the registered purpose
If you have bought a car for the private use, do not rent it out. If you do so and the car meets with a mishap, the insurer will not pay the claim. There are individuals who buy old SUVs for private use from the first buyer and give it on rent. In such a case, the transport authorities must be informed and car registration should be changed to commercial. More importantly, inform the insurer about the same while transferring the policy.
Driver does not have a valid license
When the car meets with an accident, the person driving the car must have a valid driving license, failing which the insurer will not pay the claim. If the driver does not have a valid license or the driving license has expired at the time of the accident, the claim will be rejected.
“If you have a learning license, then while driving you are expected to be accompanied by a person with a permanent driving license for that vehicle. In case of an accident of a vehicle wherein such an individual with learning license is driving alone, the insurer will not pay the claim,” says Saroj Satpathy, executive director, Salasar Insurance Broking Services.
Making changes to the car
With introduction of new technology this is rather common. Individual install CNG kits and other accessories in the car. Nothing wrong in it as long as the accessories installed are approved by authorities, adhere to the standards prescribed and are installed by company approved service stations. “Making such changes leads to change in the risk underwritten by the insurer. Hence the insurer must be informed about such changes, failing which the insurer may choose to reject the claim,” says Divya Gandhi, Head – General Insurance Broking and Principal Officer, Emkay Global.
There are instances where the car owners willingly break the rules. If you have parked your car in front of a ‘no parking sign’, and it meets with an accident, insurance company may choose not to pay you. Same holds good when a car meets with an accident when being driven on the wrong side of the road.
“If you overload the vehicle with more than permitted number of passengers or goods, then the gross vehicle weight condition is violated. Insurer can walk away without paying claim,” Gandhi said.Please note that the insurance contracts are promises to pay the insured against certain risks. If you do not pay heed to the terms and conditions, you may get rude shocks at the time of claim settlement.