7 Most Common Reasons Insurance Claims Get Rejected (And How To Avoid Them)

06 Jul 2026 · Satyasakshi LLP

Thousands of motor insurance claims are rejected every year — and the truth is that most of these rejections were avoidable. In insurance investigation work we see cases from both sides: genuine claims stuck on technical grounds, and fraudulent claims that got caught. Here are the 7 most common reasons:

1. Delay in Intimating the Insurance Company

The most common reason. Policies require prompt intimation and delay can stall the claim. But know this: the Supreme Court has held that if the theft FIR was lodged promptly and the claim is genuine, a claim cannot be repudiated merely because the insurer was informed late. Still — do not delay, or you will fight an unnecessary battle.

2. Suppression of Material Facts

Hiding anything in the proposal form — an old illness, a previous policy, the real use of the vehicle — gets caught at claim stage. Courts also side with insurers in such cases, because insurance is a contract of "utmost good faith". Protection: fill the form yourself; never sign a blank form for the agent.

3. Invalid or Expired Driving Licence

If the person driving at the time of the accident had an expired DL, or a licence for the wrong category of vehicle, the claim is at risk. Protection: track DL renewal dates, and check the DL of anyone you lend your vehicle to.

4. Using the Vehicle Against Policy Terms

Running a private car as a taxi/rental is the most common example. However, in theft cases the Supreme Court has held that breach of use is not germane to the theft, so the insurer cannot reject the whole claim — a non-standard settlement of 75% must be offered. If your claim was fully rejected on this ground, it is worth contesting.

5. Policy Lapse — Premium Not Paid on Time

The saddest rejection: the policy was simply not active on the date of the incident. Even a one-day gap in renewal leaves that day uncovered. Protection: set a reminder a week before renewal; keep auto-debit on.

6. Undeclared Modifications — CNG Kits Being the Biggest Example

Installing an aftermarket CNG/LPG kit without updating the insurer and the RC can jam the claim (especially fire or kit-related damage). From alloy wheels to engine modifications — declare whatever you change.

7. Incomplete Documents — Especially Both Keys

In theft claims the insurer asks for both original keys — to check the vehicle was not left carelessly with the key inside. If one key was lost earlier, proof of a police complaint/GD entry helps. Submit the untraced report, RC and subrogation papers on time.

Claim Rejected — What Now?

Read the rejection letter carefully — the exact reason is stated. Then your options are: (1) a written complaint to the insurer’s Grievance Cell, (2) the Insurance Ombudsman — free, no lawyer needed, (3) the Consumer Commission. Several Supreme Court rulings like those above can work in your favour — for insurance professionals we also maintain a searchable repository of such orders.