Tips for Overcoming Motor Insurance Claim Rejection

 

Facing motor insurance claim-related issues can be frustrating and challenging for policyholders. However, it's important to remember that a claim denial doesn't necessarily mean the end of the road. There are ways to address motor insurance claim rejections. By understanding the reasons behind the rejection, policyholders can increase their chances of obtaining the coverage they deserve. 

This blog will discuss a case study where the insurance company refused to settle the claim to the policyholder and also outlines some effective tips for mitigating claim denial.

National Insurance Company Ltd vs Meena Aggarwal

In this case, respondent MeenaAgarwal owned a Maruti van which was insured from January 27, 2003, to January 26, 2004. On June 12, 2003, the vehicle met with an accident and suffered significant damage. The estimated cost of repair as prepared by Automobiles Satya of Bilaspur amounted to Rs. 2,00,000/-. 

The policyholder notified the National Insurance Company and filed a claim, which was subsequently rejected. The rejection was based on the grounds that the driver did not possess a valid license and that the vehicle, originally insured for personal use,was being operated as a taxi for taking wedding parties. At the time of the accident, a marriage party was being taken in the vehicle for a rental fee of Rs. 2100/-. The insurance company argued that the vehicle was being operated in violation of the insurance policy terms due to the driver's lack of a valid license.

The claim petition was initially rejected by the District Consumer Disputes Redressal Forum in Ambikapur, Chhattisgarh. An appeal was then made to the State Consumer Dispute Redressal Commission in Rajpur. The appeal was allowed by order dated 17.10.2005, and it was determined that the complainant's claim should be considered "Non-standard" due to the violation and breach of terms. The insurance company was directed to pay Rs. 90,000/- (75% of Rs. 1,20,000/-) as assessed by the insurance company's surveyor, along with 9% interest. 

The State Commission stated that despite the vehicle being used as a taxi and the driver not possessing a valid license, there was no fundamental breach of the policy's terms. A revision petition was filed with the National Commission, which upheld the dismissal of the petition. The National Commission concluded that while the vehicle was being used commercially, there was no fundamental breach of the policy's terms.

Both the State Commission and the National Commission have not provided any reasons for their conclusion that there was no significant violation of the policy's terms.

Effective approaches to prevent motor insurance claim rejections

Dealing with a rejected motor insurance claim can be a frustrating experience, especially when you believe you are entitled to coverage. Complaints about insurance companies have been on the rise because of such rejections. 

Here are some effective tips to ensure that you do not face any problems related to motor insurance claim settlement in future.

●  Valid License: Always ensure that your driving license is valid, not expired, and appropriate for the vehicle category you are driving. 

●  Personal Use vs. Commercial Use: If your insurance policy states that it covers personal use only, but you're using your car for commercial purposes such as taxi services, it's crucial to purchase a commercial car insurance policy. 

●   Intoxication or Drunk Driving: Driving under the influence of alcohol or drugs is also a significant reason for claim rejection. If the policyholder is involved in an accident while being intoxicated, he will face insurance claim-related issues while claiming his motor insurance claim. 

●   Timely Reporting: In the event of an accident or theft, it's your responsibility to inform your insurer within the stipulated time frame, usually within 48-72 hours. 

●   Transfer of Insurance: If you purchase a second-hand car, ensure that the insurance policy is transferred to your name from the previous owner. 

Conclusion

By being aware of these tips, you can increase your chances of successfully overcoming motor insurance claim rejections. Remember to consult with your insurance subject matter experts and seek professional advice if needed.