Motor insurance claims: Report theft quickly to aid investigation, recovery

Excessive delay in reporting can trigger suspicions of fraud or evidence tampering, experts say. Timely notification to both the police and the insurer is critical for smooth recovery

In a recent ruling (Cholamandalam MS General Insurance Co. vs. Rajesh Kumar), the National Consumer Disputes Redressal Commission (NCDRC) held that a delay in informing the insurer about vehicle theft does not invalidate the claim if the insured promptly reports the incident to the police. While the court protected the claimant in this case, experts advise that timely intimation to the insurer is critical.

 

First Steps

 

The policyholder must file a police complaint immediately and then inform the insurance company. “In case of theft, the insured should also follow up with the police so that they inform all police stations, chowkies, and toll booths for detecting the vehicle,” says Hari Radhakrishnan, expert, Insurance Brokers Association of India (IBAI). He adds that prompt police action aids in tracking the vehicle.

 

Insurers should also be informed without delay. “They may have their own network of private investigators who assist in recovery efforts. They also need a head start,” says Radhakrishnan. While there is no fixed timeframe, he recommends informing the insurer within 24 hours.

 

Delayed reporting can hinder the investigation. “It can also result in lost opportunities for early intervention by the insurer and mitigation of damages,” says Abhishek Kumar, Securities and Exchange Board of India (SEBI)-registered investment adviser and founder of SahajMoney.com. Delays may also trigger suspicions of fraud if evidence appears to have been tampered with, according to Kumar. 

 

Essential Documents

 

In theft cases, an FIR and a detailed claim form must be submitted. “Alongside the FIR, a copy of the insurance policy, and ownership proof such as the registration certificate (RC), driver’s licence, and original car keys must be submitted,” says Paras Pasricha, business head, motor insurance, PolicyBazaar.com.

 

Purchase receipts, photographs, and a notarised affidavit may be required in some cases. “If the vehicle isn’t recovered, a non-traceable report from the police is needed,” says Pasricha.

 

For accident claims, the documents required are slightly different. “A duly filled and signed claim form, copy of the current and valid insurance policy, original RC, and a driver’s valid driving licence are often required during verification,” says Pasricha. A repair estimate from a garage is also needed.

 

Process and Timeline

 

Insurers generally settle accident claims within 7 to 10 days after receiving all the documents. “The Insurance Regulatory and Development Authority of India (IRDAI) mandates settlement within 30 days,” says Pasricha.

 

Theft claims take longer. “They can take three to four months or more, mainly due to the wait for the non-traceable certificate,” adds Pasricha. 

 

How to Avoid Claim Rejection

 

Negligence by the insured often leads to rejection. “Claims are often denied due to delayed intimation, insufficient documents, or failure to file a police report,” says Shilpa Arora, co-founder and chief operating officer, Insurance Samadhan. Claims can also be denied for drunk driving, using a private vehicle for commercial purposes, or making unauthorised modifications.

 

Policyholders should review the exclusions in their policy. “Exclusions like unauthorised repairs or lack of proper documents are often buried in the policy terms. Always keep records like repair receipts, photos, and communication logs to strengthen your claim,” says Arora.

 

Finally, Arora recommends that customers buy a zero depreciation add-on so they get the full cost of repair after an accident (without factoring in depreciation), and a Return to Invoice add-on so they get the original invoice cost of the vehicle after a theft.

Steps to take if your claim is unfairly rejected

• If a claim is wrongly rejected, policyholders should first approach the insurer’s grievance redressal team.
• If the issue remains unresolved, it can be escalated to the Insurance Regulatory and Development Authority of India (IRDAI) through the Bima Bharosa portal.
• For unresolved claims, further escalation can be done to the insurance ombudsman.
• If not satisfied with the ombudsman’s decision, a customer can file a case in a consumer court.