7 Reasons for Car Insurance Claim Rejection

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Bidyut Gogoi met with an accident driving his car in Nagaland. It caused a total loss of the vehicle. The insurance company car insurance rejected the claim, saying Gogoi did not have a ‘smart card driving license’ as mandated by the Nagaland Motor Vehicle Department. Gogoi does have a valid license but in paper form. Insurance Samadhan is helping him fight the case on the grounds that the authority issued no notification to the existing license holders to convert the physical licenses into a digital form.

This is one among many cases when an insurance company may reject your car insurance claim. Gogoi’s case is still unique.

There are instances when an insurer will most certainly reject your claim with no chance of you winning the case against them. We have compiled a few.

Reasons for a Claim Rejection in Car Insurance

1.     Modified the car without informing the insurer

When you modify the car, you need to inform your insurer about such modification. Modifications can be the installation of a CNG kit which is a major modification. If you fail to notify the insurer about the modification, and later an uncertain event arises, then your insurer will reject the claim at the time of investigation on the grounds of non-disclosure.

2.     Driving under the influence of alcohol or drugs

It is against the motor laws of India to drive a vehicle under the influence of alcohol or drugs. Motor Insurance companies do not encourage drivers to go against the laws and rejects claim if the driver is in a drunken state.

3.     Driving without a valid driving license

The Motor laws of India mandates every person to drive with a valid driving license and prohibit minors to drive a vehicle. Therefore, if a person does not have a valid license or is a minor, then the insurer will reject your insurance claim.

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4.     Consequential Loss

Only direct damage to the car is covered by insurance. For example, your car is parked in the garage. It rains and the garage gets flooded. You manage to get into the car and start the engine, which leads to an engine seizure. In this case, any damage to the car due to flooding will be covered, but not the engine damage because it is the result of you starting the car.

5.     Car damage due to negligence

It is the duty of the car owner to take good care of the car. It is his responsibility to drive safely. If due to negligence, the car gets damaged, the claim will be rejected by the insurer.

6.     Cause of damage excluded from the policy document

If the terms and conditions of the policy document exclude a certain situation, then the claim will be rejected for such an excluded situation.

7.     Involved in illegal activity as per the Motor Vehicle Act

As per the Motor Vehicle Act, if the policyholder is involved in illegal activity like driving in a no-entry area, then it will be called a deliberate attempt and the claim will be refused.

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There can be more instances where your claim may get rejected like using your private car for commercial purposes.


It is always better to read your car insurance policy document carefully to avoid claims rejection. 

If you face any insurance-related problems, you can contact Insurance Samadhan. We have helped 14,500+ people in resolving complaints related to insurance. Contact us to get samadhan for your insurance-related issues. We are always available to help you out.

Click on the below links to read some cases resolved by Insurance Samadhan:

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Insurance Samadhan

Shailesh Kumar


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