Top 10 Reasons Why Your Car Insurance Could be Invalid
Vehicle insurance is among the most purchased by the average consumer, but one needs to remember certain key points
Having valid vehicle insurance is one of the important requirements of driving a car at any public place in India as per the Motor Vehicles Act. It has been outlined as one of the compliance documents and has become an essential purchase for every car owner in India.
Other than being a legal mandate, having car insurance has its benefits. It insures physical damages, accidental mishaps, and theft against one’s vehicle, and can provide financial ease during tough times. Vehicle insurance is one of the most popular and most purchased insurance by the common consumer in India, and the odds of the insurance being approved are quite high as compared to other insurance.
However, there are some very simple facts that can lead to a rejection of one’s vehicle insurance or an insurance claim. Here ten most common reasons as to why your insurance could be invalid and the claim could be rejected:
1. False Claim
Insurance is designed for the common man’s benefits, and it is generally based on good faith. If an attempt to make a fraudulent claim is identified by the insurer, one can lose the benefits of vehicle insurance and there also lies a risk of legal charges being pressed by the company.
2. Vehicle Inspection
Talking about the vehicle inspection, there are certain scenarios wherein this process could be compulsory to determine the eligibility and fitment of the vehicle. Some insurers might insist you get your vehicle inspected when you take out a policy. Also, while you are renewing your existing vehicle insurance plan, you might be asked for a car inspection. Some insurers carried out this inspection free of cost, while others might charge fees for it. The inspection is done by officials or authorized agents.
3: Delayed Premiums
Making timely insurance premium payments is an essential requirement outlined by the insurer. This expectation is designed by keeping the benefits of the insurer and the policyholder in mind. There is usually a grace period that is offered to the insured in case of any unavoidable circumstances, and delays in payment could be accepted under such cases. However, a further delay or repetitive occurrence of this could lead to claim rejection or insurance invalidation.
4. Invalid Insurance Policy
In an unfortunate circumstance, a claim is accepted if the policyholder has a valid and active insurance policy with an insurer. It is very common that most people tend to forget that the policy has expired and requires renewal. If the policy expires, it is a no-brainer that the insurance claim will be rejected. Hence, it is highly advisable to have an active insurance plan and get it renewed on time.
5. Not disclosing the modifications made in the vehicle
Many car owners wish to have some modifications done to their vehicle for various reasons. The modifications could be cosmetic, or it could be functional. Either way, there is a high chance that each modification could impact your insurance. Thus, one is compelled to disclose those changes to the insurer. Failing to do so could be one of the reasons for your insurance being invalidated or the claims being rejected.
6. Commercial use of private vehicles
Most vehicles are insured for private use, which includes using them to get to and from work daily and for social purposes. If a private vehicle is exposed to commercial or business use, then that could be considered an out-of-scope claim case. If established that the vehicle was used for commercialization, the insurer can reject the insurance claim.
7. Non-adherence to the insurer’s claim process
If damages occur to the insured vehicle, there are a series of steps that need to be followed. You are expected to follow a procedure to ensure the integrity of the incident to eliminate any suspicious false play. This procedure could be submitting a list of documents, accurate details, including the time and date of the accident, etc. Failing to do so can be deemed a breach of compliance, and the insurer may reject the claim.
8. Fleeing from the accident spot
Due to a sudden mishap, it is understandable to panic and evade a difficult situation. However, this can go against one if the insured flees from the accident spot or takes the car away from there. It could be one of the important steps to have a car and the accident spot thoroughly inspected by the insurer before making any claims under certain situations. If the insurer is not presented with this opportunity, they will most likely reject the insurance claim.
9. Not following the law
Road accidents are natural and could be caused by a series of unfortunate events. These events are generally mistakes or unfortunate coincidences. However, following the law is the absolute key. An accident caused by breaking the law or driving under the influence is not entertained by any insurer whilst making a claim. If identified, the person may be deemed unfit to drive for a period of time and the insurance stands invalid.
10. Providing incorrect information
Whilst applying for vehicle insurance, one is required to fill the proposals form. Those are important documents and help the insurer learn a lot about the vehicle and the driving history etc. Fabricated information to reduce insurance premiums is absolutely unacceptable, and the claims can be outright rejected if this is identified during an inspection.
The bottom line is that one must be very careful and take all the precautionary measures to avoid claim rejections or any unpleasant surprises during the claim process. Also, the insurance company would definitely approve your claim (as per the coverage mentioned in the policy documents) if the claim is made for the right reasons. Hence, it is advisable for insureds to drive safely and buy such insurance for unpredictable incidents.
The author is Director, Probus Insurance
DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.