* The insurance company paid only the small cost of replacing the point of impact part of car which was caused due to an accident.
* All other costs such as oil & internal parts damaged were not paid for as they said that about 80 to 90 % of the estimate was secondary damage & not covered by insurance.
By Mr. Kapil Mehta, MD, SecureNow Insurance Broker Pvt. Ltd
Several motor insurance policies exclude consequential loss.
What is Cconsequential Loss..?
Consequential loss is when the proximate (or immediate) cause of the damage is not an insured event.
The insurer will ask the question:
What caused the damage?
If the answer is a risk that is not covered by insurance the claim will be denied.
Take the case of a car that breaks down in heavy rains. When the tow truck pulls the vehicle it damages the fender.
This fender damage will be denied because it was not caused by rain but by a tow truck intentionally pulling your car - a risk that is not covered.
Assume a car suffers an accident where, unknown to the driver, the engine oil leaks out. On starting the car without engine oil, the engine can seize & be damaged. This engine seizure can be denied on the ground that it was caused by the driver starting the car rather than by the original accident.
Establishing consequential loss can be subjective. If you feel you have a strong case then escalate the issue to the company’s grievance cell or the insurance regulator IRDA’s grievance department.
Demonstrate that the damage to internal parts & oil was caused by the accident and that there was no other event after the accident that could have caused this damage.
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