By Rakesh Kaul
We all expect our motor insurance company to compensate any claim raised during the term of the policy. However, most of us do not read the policy document and are unaware of the scope of our policy and the exclusions. A claim can get rejected based on these fine prints, leading to disappointments and financial loss. Here are some reasons that would lead to claim being rejected or not fully paid:
Insured Declared Value (IDV): IDV is the value of your vehicle at the time of buying insurance. It is the amount that you will get in case your vehicle is stolen or suffers total loss. It is highly recommended that you get the correct IDV which is closest to the cost of the market value of your vehicle as any undervalue or overvalue may impact the claim in future.
No Claim Bonus (NCB): This is a reward (discount) given by the insurance company to the insured at the time of policy renewal, for not raising any claim requests during a policy year. It is very important to declare the correct claim status to get accurate NCB as per the range (usually between 20 to 50%), since wrong declaration may lead to conflict at the time of claim. False NCB declaration may prejudice claim settlement.
Delay in claim intimation: After an accident occurs, there is a deadline before which you should intimate the insurance company. Any excessive delay in informing the insurance company can lead to rejection of the claim. Policy contract advises policy holder to immediately inform the insurer upon occurrence of the event (accident). Couple of days from the time of accident should be fine.
Driving without a license/ invalid license: Driver of the vehicle needs to have a valid and effective license. For instance, if he has the licence to drive a two-wheeler, but meets with an accident while driving a car, the claim will be denied. The license should not be expired, and it should be in force on the date and time of accident.
Lack of insurable interest: This means that the owner has failed to transfer the registration and insurance in his name. In such a case, if your vehicle meets with an accident, the claim will not be entertained by the insurer, as there is no legal transfer of ownership through the RTO. In simple terms, the policy holder should be the registered owner of the vehicle.
Modifications to the vehicle: Any modification done to vehicle for e.g., installing CNG kit, fitting music system, amplifier, etc. should be informed to the insurer and policyholder should get the same covered by paying extra premium. If you do not declare these changes, then your claim could be rejected.
Misrepresentation of Facts: When you buy your policy, you have to be forthcoming about the condition of your car, your previous insurance history, etc. Making false declarations could lead to your policy being considered invalid and hence cancelled by the insurance company.
Missing an insurance renewal: Failure to renew your car insurance policy on time will lead to your policy getting lapsed. In such a situation, if your car meets with an accident, the insurance company will not consider the claim and reject it. You will have to bear all the expenses out of your own pocket.
Some important add-on covers to consider:
Zero depreciation: In a zero depreciation car insurance policy, the entire claim amount is paid by the insurance company without considering the depreciation on the value of the car. If this cover is not opted, then depreciation will be applicable as per slab at the time of claim.
Engine Protect: The engine protection cover is an add-on available for car owners to protect their vehicle’s engine against uncertain loss and damage. This damage is covered only if this add on is attached to basic vehicle policy. This is an important add-on to consider opting for, as it can save you a lot of money in case of a damage.
Other points where your claim will get rejected:
Drunk driving is a legal offence, and it will lead you to face criminal charges. In such a case, the insurer will not process any claim you raise.
Using your private car for commercial purpose
Driving outside the specified geographic area defined in your insurance policy
In conclusion, bear in mind that insurance companies don’t reject or deny claims if you are claiming for the right reasons.
Always remember to read your policy document and the terms and conditions of the policy to know what is included and what is not. A little work at the start will ensure you are well-informed and clear about your insurance policy, thus avoiding claim rejection later.
(The author is Chief Distribution Officer, Edelweiss General Insurance. Views expressed are personal. Please read the offer document carefully before buying any insurance policy.)