Motor insurance: Driving with expired licence can lead to claim rejection

While a 30-day grace period is available for licence renewal, the Motor Vehicles Act of 2019 clearly states that driving with an expired licence is not permitted-even if renewal is pending

The National Consumer Disputes Redressal Commission (NCDRC) has ruled that an insurance claim may be lawfully denied if the driver of the insured vehicle did not hold a valid driving licence at the time of the accident.

 

In the case under review, the complainant’s vehicle—insured with National Insurance Company—was involved in an accident during the policy period. The vehicle was completely damaged, and the driver died. The insurer rejected the claim on the grounds that the driver’s licence had expired.

 

The District Commission in Guna, Madhya Pradesh, had directed the insurer to pay 75 per cent of the claim amount. However, the State Commission overturned this decision, and the NCDRC upheld the State Commission’s ruling, stating that not possessing a valid driving licence constituted a breach of policy terms.

 

Common grounds for rejection

 

Expired licence: While the Motor Vehicles Act, 2019 allows a 30-day grace period for licence renewal, driving with an expired licence—even during the grace period—is not permitted. “Drivers must renew their licence immediately once it expires and refrain from driving until the process is complete. In case of an accident involving an expired licence, insurers typically deny coverage,” says Narayan Rao, head–motor claims, Digit Insurance.

 

Wrong licence category: The licence must correspond to the vehicle category. “A person holding a light motor vehicle licence cannot legally operate a truck or bus. Driving with an incorrect licence type can also invalidate a claim,” says Subhasish Mazumder, head–motor distribution, Bajaj Allianz General Insurance.

 

Policy–RC mismatch: The name on the insurance policy and the vehicle’s registration certificate (RC) must match. “If the RC and the policy are not aligned—for instance, after a vehicle sale—the insurer may reject the claim due to the absence of insurable interest,” says Mazumder.

 

Delayed intimation: While there is no fixed legal timeline for reporting an accident, delays can affect claim approval. “Insurers may seek reasons for the delay before processing the claim. It is best to inform them as early as possible,” says Rao.

 

Sandeep Saraf, deputy director–car renewals, customer experience and claims at Policybazaar.com, adds that informing the insurer within 24 to 48 hours is ideal. “Some insurers may allow up to seven days, but the sooner you report, the better,” he says.

 

Driving under influence: Claims may be rejected if the driver was under the influence of alcohol or drugs at the time of the incident. “If intoxication is established, the insurer is likely to deny the claim,” says Mazumder.

 

Undisclosed vehicle modifications: Modifications that affect a vehicle’s performance, safety, or value must be declared. “Failure to disclose modifications can result in rejection or limited coverage. If the insurer was not informed, modified parts may not be covered,” says Saraf.

 

Rao adds that if the reported loss is linked to such unauthorised modifications, the claim may be denied.

 

Unauthorised usage: Using a private vehicle for commercial purposes is another breach. “This violates the ‘limitations as to use’ clause under the policy. Such usage can lead to claim rejection,” says Rao.

 

Saraf notes that attempting to claim for pre-existing damage can also result in denial.

 

Mistakes to avoid

 

To reduce the risk of claim rejection, policyholders must ensure that all required documents are accurately submitted at the time of purchase. “Disclose relevant information honestly, understand policy terms, and declare the correct no-claim bonus and insured declared value (IDV),” says Saraf.

Steps to follow after an accident 

*Notify the insurance company promptly to initiate the claims process

*Take photographs of the damage and the location as evidence for the claim

*File a First Information Report (FIR) immediately if there is injury or death involved

*Avoid making verbal settlement commitments on the spot or statements that may imply acceptance of fault

*Submit all required documentation such as police report, medical records, driving licence, RC book, and insurance policy

*Ensure all submitted information is accurate and consistent

*Promptly respond to any queries from the insurer