Motor insurance pitfalls: Why claims get rejected — 6 key points policyholders should keep in mind

A motor insurance policy seems simple on the surface: secure third-party coverage, include own-damage protection, and submit a claim whenever an accident occurs. However, real-world claim rejections usually stem from small, easily overlooked details—ranging from an expired driving licence and undisclosed pre-existing scratches to inaccurate disclosures and missing policy add-ons.

Failing to meet basic regulatory compliance is a primary reason claims fall through. Additionally, widespread misconceptions about policy features frequently lead to avoidable disputes between policyholders and insurers.

Here are six important points policyholders should keep in mind.

1. Disclose information accurately

While purchasing or renewing a motor insurance policy, policyholders should provide accurate information about previous claims, no-claim bonus (NCB), vehicle ownership, usage, modifications and other relevant details.

Misrepresentation or incorrect disclosure can become a major issue when a claim is filed. Information that may appear insignificant at the time of buying a policy could become relevant during claim assessment.

Policyholders should also inform their insurer about important changes during the policy period, including a transfer of ownership, change in vehicle usage, significant modifications or any previously supplied incorrect information.

2. Zero-depreciation cover

Under a standard motor insurance policy, depreciation is generally deducted from the value of various vehicle parts, including plastic, rubber, nylon and certain metallic components, depending on the vehicle’s age.

A zero-depreciation or zero-dep add-on reduces or eliminates depreciation deductions for eligible parts following an accident.

Without this cover, the vehicle owner could have to bear a significant portion of the repair bill from their own pocket. However, zero-depreciation cover does not pay for normal wear and tear. It is primarily applicable to eligible accident-related damage covered by the policy.

3. Add-ons

Consumables such as engine oil, coolant, lubricants, brake oil, grease, nuts and bolts are generally excluded from standard coverage unless a consumables add-on has been purchased.

Engine protection is also a separate add-on. Depending on the policy, it may cover consequential damage to the engine or gearbox resulting from specified insured events, such as water ingress or leakage of lubricating oil.

Tyres can represent another coverage gap. Damage to a tyre alone may not be covered under a standard motor policy, even when caused accidentally, unless appropriate tyre protection is included.

4. Do not combine old damage with a new claim

Policyholders should avoid adding old scratches, dents or other pre-existing damage to a fresh accident claim.

Surveyors assessing the vehicle can identify previous damage, and attempting to include it in a new claim could result in complications or disputes with the insurer.

5. Transfer policy when buying a used car

Another common misconception is that a motor insurance policy automatically remains fully valid when a vehicle changes ownership.

While the third-party or liability component transfers automatically under applicable rules, the own-damage section needs to be transferred to the new owner.

The buyer should notify the insurer, submit proof of purchase and the required documents, including Form 29 and Form 30, and apply for transfer of the policy.

6 if the car is stolen

In case of vehicle theft, the policyholder should immediately lodge a First Information Report (FIR) with the police and inform the insurance company.

The owner should also notify the Regional Transport Office (RTO), obtain an acknowledgement and submit the original Registration Certificate (RC) and vehicle keys to the insurer as required.

Delays in reporting the theft or failure to provide the required documents can complicate the claim process. Following the insurer’s prescribed procedure promptly can help avoid unnecessary delays or disputes.