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Why motor claims get rejected and how to avoid it?
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Introduction
Most car insurance claims that are not paid come down to a small set of avoidable reasons, an invalid licence, a lapsed policy, an excluded event, or a notification that arrived too late. None of these are hidden in the small print. Every reason a claim goes unpaid is documented in the policy terms and in the Motor Vehicles Act. This blog covers each reason, why it voids the claim, and the specific action that prevents it.
In this blog, we are going to cover the 7 most common reasons an Own Damage or Third-Party claim is not approved, what each reason means for the payout, how to prevent each one, and what to do if a claim is not approved after all preventable steps have been taken.
Keep in mind
An invalid or expired driving licence can lead to an Own Damage claim being rejected
A lapsed policy provides no cover for incidents that occur after the policy expires
Excluded events, age-related damage, mechanical breakdown and consequential loss are generally not covered
Delayed claim notification or repairs before the required inspection can affect claim approval
Incorrect vehicle details, undeclared modifications or non-disclosure of important information can affect the policy and claim
1. Driving without a valid licence or the wrong licence category
This is the single most common reason an Own Damage claim is not approved on a car in India.
Under Section 3 of the Motor Vehicles Act, every driver must hold a valid licence for the category of vehicle being driven at the time of the incident. If the driving licence is not valid, for any of the following reasons, the OD cover is void:
Expired licence
If the licence has expired when the incident occurs, it can affect OD claim eligibility.
Wrong vehicle category
Your licence must cover the category of vehicle you are driving. For example, a two-wheeler licence does not authorise you to drive a car.
Learner's licence without supervision
A learner must follow the applicable conditions, including being accompanied by a valid full-licence holder where required. Not meeting these conditions can affect the claim.
How to prevent it
Check your licence validity and vehicle category before driving. Set a reminder before expiry and renew through the RTO or Parivahan portal in time.
Parivahan portal
2. Driving under the influence of alcohol or drugs
A claim for damage to the car, or for Third-Party liability, is not paid when the driver was under the influence of alcohol or drugs at the time of the incident.
Under Section 185 of the Motor Vehicles Act, driving with a blood alcohol level above 30 mg per 100 ml of blood is a criminal offence. Motor insurance policies universally exclude claims arising from incidents where the driver's blood alcohol level exceeded the legal limit. The same exclusion applies to driving under the influence of narcotics.
This exclusion applies to both the Own Damage claim and the compulsory Third-Party liability cover. The insurer may pay the Third-Party claim initially, to protect the injured third party, but can then recover that amount from the policyholder.
How to prevent it: There is no policy workaround for this exclusion. Do not drive under the influence of alcohol or drugs.
3. Raising a claim for an excluded event
Not every event that damages a car is covered by the OD policy. Claims raised for excluded events are not approved regardless of the policy tier or the optional covers held.
The most common excluded events are:
Age-related damage
Damage caused by the gradual deterioration of parts, such as a worn clutch, corroded brake lines or hardened seals, is not covered.
Mechanical or electrical breakdown
Failures caused by mechanical or electrical faults, overheating or poor maintenance are generally not covered under OD. Breakdown cover, if available, may provide roadside assistance but not repair costs.
Consequential loss
Damage caused by actions taken after the initial incident may be excluded. For example, starting a flooded car can worsen engine damage. Engine Protect may cover eligible engine damage caused by flooding, subject to its terms.
Damage outside India
Standard OD cover generally applies to incidents within India.
Organised racing or speed contests
Damage during organised races or speed contests is generally excluded.
How to prevent it
Check your policy exclusions at every renewal. If you live in a flood-prone area, consider relevant optional covers and never attempt to start a flooded car.
4. A policy that has lapsed or is not active
A lapsed policy provides no cover. If the renewal premium is overdue and an incident occurs during the lapse, no claim can be raised, for OD damage, Third-Party liability, or any other covered event.
How a policy lapses
If the renewal premium is not paid by the policy end date, the cover ends on that date.
Grace period
Some insurers allow a short period, typically 15 to 30 days, to renew after the policy ends, but incidents during this period are generally not covered. Which means you cannot make a claim during this period. Check your policy terms.
Renewing after a lapse
The insurer may require a vehicle inspection before restoring OD cover.
How to prevent it
Set a reminder 30 days before your policy expires and renew it before the end date.
5. Non-disclosure or misrepresentation at policy purchase
At the time of buying motor insurance, you must provide accurate information about the car and how it is used. Incorrect or missing information can affect the claim or, in serious cases, the policy itself.
Incorrect vehicle details
Differences in the registration number, chassis number, engine capacity or other RC details can cause claim issues.
Undeclared modifications
Modifications such as a performance exhaust, turbocharger or suspension upgrade should be disclosed. If an undeclared modification affects the risk or the damage, the insurer may decline or reduce the claim.
Incorrect IDV
A lower declared IDV can result in a lower payout if the car is stolen or declared a total loss.
Commercial use on a private policy
Using a car insured for private use as a taxi, for goods delivery or other commercial purposes can affect claim eligibility.
How to prevent it
Check that your policy details match the RC, disclose modifications and select an IDV that reflects the car's current value. Ensure the policy reflects how you actually use the car.
6. Delay in notification or repair before inspection
Notifying the insurer promptly and waiting for the required inspection can help prevent claim issues.
Delayed notification
Most policies require you to report an incident as soon as reasonably possible. A long delay without a valid reason may lead the insurer to question or reduce the claim.
Repair before inspection
Starting repairs before the insurer assesses the damage can make it difficult to verify the extent and cause of the damage. This may affect the approved claim amount.
How to prevent it
Notify the insurer as soon as possible after the incident. Avoid starting repairs until the required inspection is completed and the repair estimate is approved.
7. Raising a claim outside the policy period
A claim is valid only if the incident occurred within the policy coverage period, after the policy start date and before the policy end date. An incident that occurred before the policy was purchased, or after it lapsed, is not covered.
Date of loss vs policy dates
The most important date is the date of the incident, not the date the claim was registered. If an incident occurred on the policy end date, check the exact time of the incident against the policy's exact end time. Most policies specify coverage to midnight on the end date, incidents after midnight are not covered.
Claims raised for pre-existing damage
If the car already had damage before the policy was purchased, damage that is now being claimed as if it arose after the policy start date, the insurer's surveyor assessment will typically identify the inconsistency. Pre-existing damage is not a covered event.
How to prevent it
Renew the policy before the end date, not on the end date. Check the exact policy start and end times on the policy document. Do not raise a claim for damage that existed before the policy began.
What to do if the claim is not approved, the escalation path
If a claim is not approved and the car owner believes the decision is incorrect, there is a defined escalation path under IRDAI regulations.
- Step 1
Request the reason in writing
The insurer must provide a written explanation for any claim that is not approved. Ask for this before taking the next step.
- Step 2
Internal grievance
Raise a formal grievance through the insurer's published grievance redressal process. At Kiwi Insurance, the grievance process is at kiwiinsurance.com/grievance-redressal/. Under IRDAI regulations, the insurer must resolve the grievance within 15 days of receipt.
kiwiinsurance.com/grievance-redressal/ - Step 3
IRDAI Bima Bharosa portal
If the insurer does not resolve the grievance within 15 days or the resolution is not satisfactory, the complaint can be escalated to the IRDAI Bima Bharosa portal at irdai.gov.in.
irdai.gov.in
For Third-Party liability disputes: If the dispute concerns a Third-Party claim involving injury or death, the Motor Accident Claims Tribunal (MACT) is the formal route. The Third-Party claims process is described at the Kiwi motor-third-party-claims page.
What Kiwi Insurance does differently
A rejected claim can leave you unsure about what went wrong and what you could have done differently. Kiwi Insurance gives you a dedicated point of contact to help you understand your cover and claim requirements from the start.
Kiwi's Dedicated Claims Specialist
Once you register a claim, Kiwi assigns a dedicated specialist who explains what your policy covers, which documents are needed and what to expect at each stage.
Support throughout the process
Your specialist remains reachable through the Kiwi app for questions about your cover, documents, inspection or claim status.
Clarity on your claim
The specialist can help you understand how the policy terms apply to your specific situation and what to expect from the claim process.
The Claims Specialist is assigned after you register a claim, not when you buy the policy.
Conclusion
The 7 most common reasons a car insurance claim goes unpaid are all preventable: an invalid licence, driving under the influence, a claim for an excluded event, a lapsed policy, non-disclosure at purchase, delayed notification or pre-surveyor repair, and a claim outside the policy period. Each one has a specific and straightforward preventive action. Reviewing the policy document, keeping the licence valid, renewing before the end date, and notifying the insurer before any repair begins, these 4 habits eliminate most of the risk.
Want to make sure your next car insurance claim is not challenged on a technicality?
Head to Kiwi Insurance to review your policy and register a claim with a dedicated Claims Specialist on your side.
Frequently asked questions
Common reasons include an invalid driving licence, a lapsed policy, damage that is excluded from the policy, delayed notification or repairs started before the required inspection. Ask the insurer for the reason in writing if your claim is rejected.