Does an insurance claim get honoured in case of a vehicle catching fire or get rejected by the concerned insurance company on flimsy grounds?
The increasing number of vehicles on Indian roads is not only leading to pollution and traffic jams, but has also given rise to fire incidents in recent years. Although a majority of automakers usually don’t take the responsibility and blame the incidents on tampered wiring, but what about insurance claims in such cases? Does the claim get honoured in case of a vehicle catching fire or get rejected by the insurance company on flimsy grounds?
What is covered?
Industry experts say that if you have a comprehensive car insurance policy, the insurance company covers you entirely for any loss or damage to your car caused due to fire. “These damages or losses can be external or internal in nature like damage to the wirings or electrical fittings of the electrical parts and components of the vehicle due to fire. For the purpose of claim, fire is clearly defined as ‘actual ignition of/or in the vehicles with flames visible.’ Therefore, damage due to overheating or short-circuiting is not considered as an actual fire and the claims for the same are not acceptable,” says Devendra Rane, Founder & CTO, Coverfox.com.
Thus, loss or damage to a car due to fire is covered under the comprehensive car insurance policy. However, such damage is not covered in a standalone third party policy.
In case of a comprehensive policy, insurers will honor the claim if it is established that the damage or loss is due to fire irrespective of it arising due to internal or external means. However, if the fire ignition is proven intentional from the owner, then the claim will be rejected.
“The main reasons of a car catching fire can be because of electric or wire short circuits, or some wiring defects. While the damage because of fire is covered, the insurer will not cover the standalone damage to wiring or parts (without any fire) unless those are damaged in fire,” says Animesh Das, Head-Product Strategy, ACKO.
One more possible scenario may be when cars are set on fire in case of riots. “Even these cases are covered under comprehensive car insurance. In case the engine catches fire and the vehicle is completely burnt, then the insurer will pay the vehicle value minus deductible,” says Das.
How to make a Claim
In case your vehicle catches fire, you should immediately contact your insurer and the police to report the matter. Prompt reporting of the incident to the insurer helps in arranging a spot survey. Spot survey helps in an easy and early claim settlement. “The insurer may also ask you to submit the FIR report detailing the cause of the accident, which in turn helps them to carry out their own investigation. During the investigation, if it is found and proven that the mishap was a result of a thoughtful and planned attempt of the policyholder to claim insurance, the claim will be rejected,” says Rane.
Claim Rejection Scenarios
Insurers reject the claim if the vehicle catches fire under the following conditions:
# Mechanical defects like oil leakage, fuel seepage, high pressure at vulnerable parts, overheating of engine and other defects.
# Sparks from the vehicle’s battery, which may not be able to support fitment of additional accessories.
# Sparks from tear in the electric wiring systems.
# Installation or replacement of LPG gas kits, air conditioners, etc.
# Short circuits or defects due to tampering of the electrical wiring system to fit extra accessories like woofers, amplifiers, headlamps, fog lamps, alarms, air filters, etc.
An insurance claim may be rejected if any unauthorized accessory is fitted and the fire is caused due to the same accessories. “Therefore, car owners should make sure to use authorized accessories and also that original wiring systems are not altered beyond the prescribed limits,” says Das.
It is, thus, very important that car owners do not tamper with the original electric system of a car to fit accessories which consume higher voltages. Even at the time of repairs, the mechanic must ensure that the wiring system is not torn. The owner must also install a small fire extinguisher in the vehicle which may help in case of an emergency.