Why might your car insurance claim get rejected in the Philippines?

No matter how much you love your car and how much you drive with care, there’s always a sense of uncertainty looming when you go out on the road. Even if you are one of the safest drivers around, chances are that your car will be damaged at some point in time. Thankfully, there is the provision of car insurance to make up for the loss due to damage. It provides peace of mind knowing you're financially protected in case of accidents, thefts, or even natural disasters. But what if your claim is rejected? Believe it or not, it's more common than you might think.

Insurance agencies play a crucial role in safeguarding individuals from substantial financial losses. However, they also have to ensure that claims are legitimate and fit into the policy terms. So, before you find yourself in a frustrating situation next time you file for an insurance claim, let's explore the top reasons why car insurance claims get rejected in the Philippines.

Also Read: A step-by-step guide on how to claim car insurance in the Philippines

Top reasons for car insurance claim rejections

Unpaid insurance premium: This one might seem obvious, but it's a surprisingly common reason for claim denials. If you haven't paid your insurance premium on time, your policy might be considered lapsed, leaving you without coverage during the period of non-payment. If you forget to renew your policy, you'll be on the hook to get the repairs done on your own. To avoid this pitfall, set reminders on your phone or opt for automatic debits through your bank.

Fraudulent claims: Insurance­ scams are on the rise, making insurance companies more vigilant and scrutinizing each claim more carefully. If they suspect something fishy in your claim, like ove­r the top damage cost or an accident description that sounds unreal, they'll dig deepe­r. For instance, let's say you accidentally bumped a post in your own driveway, causing minor scratches and are tempted to claim it as a hit-and-run to get a full bumper replacement. While the idea sounds lucrative, insurance companies have investigators who can identify inconsistencies in your story or even use CCTV footage to expose this fraud. If the fraud is proven, you could face legal repercussions like hefty fines or even jail time in addition to a claim rejection. Not worth it, right?

Damages not covered in policy: The world of auto insurance is flooded with companies, but not all the companies offer equally created policies. Every company has its own terms and policies and several packages, which are differentiated on the basis of coverage inclusion terms and other fineprint clauses. Basic policies, often referred to as third-party liability (TPL), might only cover theft or collision damage caused to another vehicle or property. If you want broader protection, consider comprehensive coverage, which extends to natural disasters like typhoons, floods, earthquakes, and even fire. Remember, a comprehensive coverage carries higher premiums, but it provides invaluable peace of mind for unexpected situations.

The claim amount is below the deductible allowance: Your deductible is the portion of repair costs you're responsible for before insurance kicks in. If the damage is minimal and the repair cost falls below your chosen deductible, the insurance company won't pay anything. It is usually computed as 0.5% of your vehicle’s fair market value (FMV) or a minimum of ₱2,000, but it’s better to check with your provider for the exact amount. So, for example, if your vehicle’s FMV is ₱1000,000, your deductible is ₱5,000. Your provider will deny your claim if you’re applying for less than that amount. You have the option to choose a higher or lower deductible based on your budget and risk tolerance. A higher deductible generally translates to lower premiums, but it also means you'll have to pay more out of pocket in case of a claim.

Repairs without approval: After an accident, we often rush to fix our car right away, especially if it's badly damaged. But if you start repairs without telling your insurer or getting their approval, you're asking for trouble. Some insurers need estimates from specific repair shops or parts suppliers before approving a claim. Skipping this step could leave you crossing your fingers, hoping your claim doesn't get rejected.

Driving without a license: Having a valid driver's license is a must for not only driving but for claiming insurance as well. If you're driving without one, don't expect your insurer to bail you out if you're in a crash. It might sound tough, but it's all about emphasizing the golden rule: drive responsibly.

Negligent driving: If the insurer determines that the accident occurred due to reckless or irresponsible driving behavior, such as speeding, driving under the influence, or texting while driving, they may reject the claim. It's essential for policyholders to drive responsibly and adhere to traffic laws to avoid claim denials.

Driving without a valid or active OR/CR: Just like a driver's license, having an up-to-date Official Receipt (OR) and Certificate of Registration (CR) is crucial for owning a car and being covered by insurance. These documents confirm your ownership and guarantee that your vehicle meets safety standards. If your OR or CR is expired or contains errors, such as a mismatched chassis number, your claim could be turned down.

Traffic violations: Violating traffic laws can be considered a contributing factor to an accident. If the insurance company finds that you have broken any traffic laws, leading to the accident, they might deny your claim.

Driving clause violation: Typically, a car insurance policy specifies who is authorized to drive the insured vehicle. This usually refers to the person named on the policy, and may extend to include spouses or other listed drivers. However, if someone not listed on the policy, like a friend who isn't authorized to drive, causes an accident, your claim could be denied.

How to handle a denied car insurance claim?

 

When your car insurance claim is denied, don't lose heart. Keep fighting for the fairness you deserve.

Review the denial notice: The insurance company will provide a written explanation for the claim rejection, usually called a denial letter. Carefully examine this document to identify any potential errors or concerns and consider possible counterarguments.

Gather evidence: If you disagree with the decision, gather all relevant documents and evidence to support your case. This may include police reports, repair estimates from auto shops, witness statements, or security camera footage, if available. The more evidence you have, the stronger your case for reconsideration.

Request a reconsideration: Contact the insurance company and formally request a reconsideration of your claim despite the initial denial. Present your findings and explain why you believe the claim should be considered valid. Maintain a polite yet persistent demeanor during this process.

Seek help from the Insurance Commission (IC): If appealing directly to the insurance company doesn't yield satisfactory results, consider filing a complaint with the IC. As the government regulator of the insurance industry, the IC acts as a mediator between insurers and policyholders and can help resolve conflicts. You can drop an email at publicassistance@insurance.gov.ph or call any of the following numbers, and the IC will assist you with your claim dispute:

• (02) 8523 8461 local 103/127
• Globe: (0917) 116 0007
• Smart: (0999) 993 0637

To sum it all

Knowing the reasons behind rejected car insurance claims in the Philippines can save you a lot of frustration down the road. By thoroughly understanding your coverage, including policy terms, exclusions, and claims procedures, you can steer clear of unpleasant surprises when you need to use your insurance. Remember, close collaboration with your insurer yields the best outcomes. Don't hesitate to ask questions and clarify any doubts you may have about your coverage. This proactive approach ensures a smooth claims process and provides invaluable peace of mind.

Also Read: Choosing the right car insurance policy in the Philippines