Be responsible to avoid claim repudiation

It was with a lot love and affection that Birva's parents gifted her with a car for having passed her exams with flying colour and thus securing an MBA degree from a leading business management school. Birva always wanted to drive her own car and have a good time in the company of her friends. She was elated to receive the gift and immediately took the car out to show her friends. However, in her excitement, she misjudged the vehicles speed while maneuvering a turn inside the society thus ending up hitting the main gate. The result, a dent on the rear end of the car and the vehicle tail lights broken into pieces. To avoid getting reprimanded by her parents, Birva immediately rushed the vehicle to a nearby garage so that the car could get repaired at the earliest.

On completion of work and being handed over the bills from the garage for the repair work, Birva filed for an insurance claim with her insurance company for a reimbursement. To her shock, the claim lodged by Birva was flatly denied by the insurance company on the grounds that the company was not informed about the incident & repair work had been initiated before the surveyor could inspect the car. For any damages caused to an insured vehicle, it is imperative for the insured to inform the company before initiating the repairs. Not following the process leads to claim repudiation.

Alike Birva, there are many individuals who face repudiation of motor claims because of their limited knowledge about how a motor insurance contract works. Insurance is a principle which works on the principle of Good Faith and requires facts to be disclosed before issuing a risk cover.

There are certain activities or aspects you should avoid to ensure that your motor insurance claim is not repudiated by the insurance company. Lets look at some instances which may lead to claim repudiation due to lack of information or appropriate behaviour:

1)Additional installation of CNG Kit not endorsed on RC and Policy: With the rising fuel cost, car owners have started installing alternate fuel kits such as CNG and LPG to save fuel cost. If the fuel kit is not endorsed in the RC and Policy copy, the insurance company can repudiate the claim.

2)Private vehicle used for commercial purposes: An insurance company will repudiate the claim if the private vehicle was being driven for commercial purposes.

3)Repair work started before inspection: It is critical for the surveyor of the insurance company to inspect your vehicle before work on the damaged vehicle is commenced.

4)Overloading of the vehicle: If the insured vehicle was overloaded beyond the permissible limit at the time of loss, claim can be repudiated.

5)No Insurable Interest: This arises for cases where RC and Policy is in the first owners name & the vehicle is sold to a second owner but the policy is not transferred at the time of loss.

Apart from the above reasons for repudiating a claim, an insurance company has the right to reject a claim if the driver of the vehicle is found and proved guilty to be under the influence of alcohol and does not possess a valid driver license at the time of loss.

We all should take onus of being transparent in our communication while purchasing a motor insurance policy from an insurance company to avoid claim repudiation.