7 reasons why your car insurance claim can get rejected

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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Although car insurance claims are hardly rejected if you follow the proper procedure, there are a few claims that do not fall through which might leave you disappointed. There are seven reasons why your car insurance claim can get rejected. By knowing these reason’s you can improve your chances of being approved, especially when you need it the most.

An unlicensed driver was at the wheel

According to Smith Lawyers, 5% of fatal crashes are caused by unlicensed vehicle drivers. Insurers are unlikely to process a claim on damages caused by an unlicensed driver. Any liability will have to be paid for by the unlicensed driver. However, if you have your own comprehensive car insurance policy, it will cover damages and recover the amount from the unlicensed driver.

Dishonesty can make things awkward

You might be able to get away with it during the underwriting process, but your lies will eventually catch up with you when it is time to place a claim. The Australian Institute of Criminology estimated the cost of fraud to the industry and the Australian community to be as much as $9 billion a year. This can impact how much insurance consumers pay a year. Insurance fraud can be:

  • Fraudulent non-disclosure – in the form of misrepresentation of facts material to your insurance company. This can be in the form of not disclosing that you have had a criminal conviction or giving misleading information when making a claim.
  • Opportunistic – in the form of exaggeration of legitimate claims
  • Premeditated – anything that has been staged or fabrications of a claim

Driving a car that is falling apart

You might adore your first car that you bought 20 years ago because it harbours so many memories. However, your museum on wheels can cost you in terms of repairs and processing your claim. This mean your car is a risk with its run-down tyres and faulty wipers. You might also want to check under the bonnet to see if it hasn’t become a home for any living creature.

Negligence in maintenance

It is vital that you service your car according to the instructions of the manufacturer or your trusted mechanic. Not only will it ensure that your claim get’s approved, but it can also maintain the warranty on your car.

Being a reckless driver

Playing the part of a die hard extremist with your car will definitely get your insurance claim turned down. If you drive under the influence, have no security features in place for your car, and leave it unsecured on the street then your claim will not be processed.

Forgetting to pay your policy

You don’t want to be left red faced when you make a claim only to be told that you are behind payments. It’s a mistake that anyone can make, but it’s important that you rectify it as soon as possible. You can set up a recurring payment or paying the bill as soon as you receive it.

Car modifications

Whether you dropped your car low or did modification to the engine and did not inform your insurer will be a recipe for disaster. Car modifications are any changes that you do outside of the set features done by the manufacturer. You will have to also inform your insurer on the value of these changes in order for them to replace them accordingly.

If you are not pleased with the reason for rejection by your insurer you can always seek legal advice that is free. Always remember that honesty is your best policy.

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