For most vehicle owners, motor insurance is something you buy once and forget about. It sits quietly in your inbox, renewed every year, until the day something goes wrong.
That is when the real test begins.
An accident, a flooded road, a damaged engine, and a car claim is filed with the expectation that the insurer will step in. But for many, that moment turns into something else entirely: confusion, partial payouts, or in some cases, outright rejection.
The problem, experts say, is not always the insurer. More often, it is the gap between what customers think their motor insurance policy covers and what it actually does.
Saurabh Vijayvergia, founder and CEO of CoverSure, said that when his team looks into , the reasons are often simple.
“Nine times out of ten, the reason is something that could have been avoided entirely,” he said.
In many cases, it is a policy that has lapsed because the renewal reminder was ignored. In others, it is a driving licence that expired months ago. Sometimes, it is a modification, like a CNG kit or accessories — that was never declared to the insurer.
“These aren’t obscure technicalities. Their conditions are well within the insurer’s rights to enforce,” Vijayvergia explained.
Not all motor insurance claims are rejected outright. Many are settled, but not fully.
“The claim isn’t rejected, but the customer gets back maybe 60% of what they spent at the garage,” he said.
The reason is depreciation.
In a standard car insurance policy, the value of replaced parts is reduced before reimbursement. So even if you replace a bumper or headlamp, you may not get the full cost back.
“Most people don’t know this until the cheque arrives,” Vijayvergia said.
When motor insurance claims get rejected, many customers feel cheated. But the issue is often lack of awareness.
“I’ll be honest with you, it’s almost always awareness. Or rather, the absence of it,” Vijayvergia said.
He pointed out that most people do not fully understand their motor insurance policy terms and exclusions.
“The terms are in the document. But the document is forty pages of dense language handed over with a ‘please read carefully’. Nobody reads it carefully. And nobody explains it clearly either.”
That gap becomes visible only when a claim is filed.
On paper, the motor insurance claim settlement ratio in India looks strong.
“The better insurers are settling 95–98% of claims,” Vijayvergia said.
But this number can be misleading.
“A claim that’s settled at 40% of what the customer expected still counts as ‘settled’,” he added.
The real issue is the gap between expectations and payout.
Motor insurance continues to be among the top categories for complaints, showing that claim disputes are widespread.
One of the biggest misconceptions in motor insurance in India is the term “comprehensive”.
Customers often assume it means complete protection. It does not.
“A base comprehensive policy simply doesn’t cover hydrostatic lock,” Vijayvergia said, referring to engine damage due to water entering the engine.
This has become a major reason for motor insurance claim disputes during floods in cities like Mumbai, Bengaluru, and Chennai.
“The customer bought a comprehensive policy and assumed that meant everything,” he said.
According to Vijayvergia, there are recurring scenarios where car insurance claims get rejected or reduced.
Driving through flooded roads is one of them. Without engine protection add-on, damage may not be covered.
Another is flooded parked vehicles, where external damage is covered but internal engine damage is not.
Undeclared modifications like alloy wheels or accessories can also impact claims.
“The insurer’s position is that the risk profile changed. The customer often doesn’t know they had to declare it,” he said.
Add-ons play a critical role in motor insurance claim success.
“They matter a great deal, more than most people realise,” Vijayvergia said.
Zero depreciation cover ensures full payout on replaced parts.
Without it, customers may pay Rs 30,000 to Rs 80,000 from their pocket.
Engine protection is equally important.
“A single engine repair can cost Rs 1 lakh to Rs 3 lakh, while the add-on premium is just a few hundred rupees,” he said.
Skipping these to save on premium can be costly.
Some mistakes after an accident can weaken your motor insurance claim.
“The biggest one is repairing the car before the insurer’s survey,” Vijayvergia said.
Other mistakes include:
not taking photos of the accident
not filing FIR in serious cases
discrepancies in repair bills
All these can raise questions during claim settlement.
Delay alone cannot lead to rejection.
“IRDAI has clarified that delay in intimation cannot be the sole reason unless it increases the loss,” Vijayvergia said.
Still, informing the insurer early is important for smoother processing.
Vijayvergia suggests four checks:
Check if zero depreciation cover is active.
Check if engine protection is included.
Declare any modifications to your vehicle.
Save your insurer’s claim helpline number.
A rejected car insurance claim is not final.
Customers can:
file a complaint with insurer
escalate to IRDAI
approach Insurance Ombudsman
“It’s free and covers disputes up to Rs 50 lakh,” Vijayvergia said.
Motor insurance does not fail suddenly. It exposes the gaps that already exist in your policy.
And those gaps usually come from not understanding what your motor insurance actually covers.
(NOTE: This is the second story in our Motor Mess series, which looks at the hidden gaps, fine print, and real-world risks in motor insurance that most vehicle owners only discover when something goes wrong.)