7 Causes Of Denied Car Insurance Claims

Having car insurance can be handy in the event of an accident or collision. However, you may not always be approved for any claim you make. Depending on your circumstances, there may be times when your car insurance claim is declined. According to Insurance Council New Zealand, very few claims are actually turned down every year but there are certain reasons for insurers to turn reject a car insurance claim:

Withholding information from your Insurer

First, you need to be upfront about all the things your insurer will ask, to ensure a smooth car insurance claims process. This includes any convictions you may have been charged in the past, such as driving under the influence.

Of course, information regarding your vehicle is important as well. You need to tell your insurer about any modifications and changes done to your car at the time you take out the policy. This can also insure that your modifications are included as part of the policy, with your insurer taking these into account when they pay for any damages.

Other than that, you also need to tell your insurer about any accidents and claims you made prior to the policy taking into effect, even if these claims weren’t successful either. Being transparent about the information requested from you is essential to ensure a successful car insurance claims process in NZ. Withholding any of these could lead to your claim not being honoured, leaving you to pay for the damages out of pocket.

You need to be transparent about your vehicle’s use as well. Most business vehicles are covered under business insurance so getting into an accident while your car is being used for business purposes such as the transfer of certain goods, your car insurance provider may deny you your claim. In that case, you’ll probably have to ask your business insurance provider to cover it, should you have one.

Claim is outside the policy’s coverage

This one is the most obvious, and it’s usually just a result of the policy not covering the specific circumstances of the incident. For instance, a third-party policy will not pay for the repairs for damages to your vehicle, paying only for damages you may have caused to someone else. That’s why it’s always best to check with your insurer and read your policy details so you have a full grasp of what your responsibilities are and what is included in your package. 

It’s essential to consider your circumstances when choosing the level of coverage. If you’re the type who uses their vehicle often, you may want to look into a comprehensive level of cover to avoid incidents that fall outside the basic cover available.

Unsafe driving

In order to qualify for a car insurance policy, your car must first be proven safe to drive. Usually, insurers will look at whether the vehicle has passed its Warrant of Fitness (WOF) test to determine this. If it fails to pass this kind of examination, your insurer may not pay out a car insurance claim you make.

Your WOF will check different parts of the vehicle such as your lights, suspension, handbrakes, etc. It’s best to check your tyres and their threads too. Do they still work? Is the grip on the road still adequate? Always make sure to have all these things sorted and checked to make sure your vehicle passes the inspection in order to qualify and avoid a declined insurance claim when you need it.

License Problems

Your insurer may also refuse your claims if you break the conditions of your driver’s license. For instance, if you get into an accident while carrying a passenger using only a restricted license, your insurer may not pay for any damages. This also applies if you drive a vehicle class that’s above your license type (e.g. trucks).

Unnamed Drivers

Some providers give you the option to name other drivers within your policy. However, that means only named drivers are allowed to operate the vehicle. Should a driver not included in your policy get into an accident using your vehicle, you can expect a declined insurance claim from your provider.

Likewise, this may also apply for when you apply for car insurance for your child. If you were to be involved in an accident while driving your child’s car and it’s your child that’s on the policy, your insurance claim will be declined.

Drug and Alcohol Use

Driving under the influence is usually not allowed, no matter the circumstances. If it was proven that you drove around while under the influence of alcohol or drugs hours before your accident, your insurer will deny your claim. 

Not taking care of your vehicle

As an important part of your responsibilities, you need to take care of your vehicle at all times. You also need to take proper care of your vehicle’s peripherals. Irresponsible behaviour such as leaving your car unlocked in public parking lots or leaving your keys inside the car, on the seat, may lead to your insurer denying your claim in the future. So always take care of your vehicle and be mindful of where you park and where you drive.

Are Insurance Disputes common in NZ?

There are insurance disputes in NZ of course.  Misunderstandings can happen and most providers have a complaints team you can discuss your rejected claim with. If you need to escalate the discussion, you can ask your insurer as to which dispute resolution service they use for these incidents, and get the proper advice from them.

Having insurance is a two-way responsibility. It’s not a free pass to be reckless while driving out on the road. In order to ensure continued coverage, you need to be aware of your responsibilities as a car owner and policy holder. Take care of yourself and your vehicle while driving and always remember to be transparent with your insurer regarding the information they need. Fulfill all these, and you will have an easy car insurance claims process in NZ when you need it.