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Reimbursement Vs Cashless Car Insurance Claims

By Vikas Chandra Das
29 August 2022, 11:57 AM

When it comes to car insurance policies, the claim process is a very important aspect that many people often forget to read about. People care more about the price of the premiums and the benefits covered under the policy, however, in many ways, the claim process is the most crucial facet that you should examine before buying a car insurance policy.

So, in this article, we will explain the two popular car claims processes – Reimbursement and Cashless, and how they are different from each other. 

To help you understand this in a better way, we have curated a comprehensive list of the differences between reimbursement and cashless car claims, based on various aspects.

How does it take place?As the name suggests, the claimed amount is ‘reimbursed’ by the insurer at a later stage. You will have to pay for the bills out of your own pocket to start with.In this process, the settlement is made immediately by the insurance company, be it to the garage or the hospital. It is because of the tie-ups between the insurance company and the concerned authorities.
Major AdvantageOne of the biggest advantages of this type of claim settlement process is that you do not have to spend time finding a garage or a hospital from the network list provided by the insurance service provider. This comes in handy when there is an emergency.You do not have to bear the expenses along with the emotional turmoil you are already in due to the accident. You no longer have to worry about arranging huge amounts of money on a short notice to repair the car or pay the hospital bills.
Major DisadvantageYou will have to keep track of all the documents and bills related to the payment to ensure that the claim process is smooth, which is very cumbersome, to say the least.If your preferred garage or hospital is not a part of the insurance company’s network, you will not be able to make a claim for the services you enjoyed at those facilities.
Network of garages and hospitalsYou do not have to worry whether the claim will be valid or not, depending on the garage or hospital you visit. You have the freedom to go to any garage to repair your car or to any hospital to treat yourself after an accident.You can only visit the hospitals or garages that have a tie-up with your insurance service provider, if you are to make a successful claim.
Time Frame for claim settlementThe turnaround time for the claim settlement in this case is quite long since there is a lot of back and forth between the hospital/garage and the insurer. Moreover, you will often end up visiting these places, until the settlement is done.Since there is already a tie-up between the network hospitals/garages, in this case, and the insurance company, in this case, the time frame for the claim settlement is very less. You can get the job done within a few hours and you will be good to go.
Documents required to make the settlementYou will need a lot of documents to make a claim and get a successful settlement on time. , In case of the garage bill settlement, you need a proper invoice for the repair, receipt of payment, a cancelled cheque and more apart from the regular documents like an FIR, PAN/Aadhar card, RC and Driving Licence. Furthermore, in case of hospitalisation due to an accident, you need the discharge summary, hospital expenses, prescriptions, medicine bills, test reports, diagnosis reports and more to get the settlement for hospital expenses.You just need the basic documents in this case, like your policy document, your identity, and address proofs and in case of hospitalisation due to an accident, a select few forms filled with the help of the TPA (Third-party Administrator). You save a lot of paperwork and time here since there is already a reliable tie-up between the facilities and the insurance company.
ExampleWhile driving back from the office, Rajesh's car met with an accident. The next day, he contacted his insurance company and made a reimbursement claim request. After that, he visited a local garage in his area and got his car repaired. Since Rajesh had opted for the reimbursement claim process, which means he had already paid the bills from his pocket. And, now he wants reimbursement from his insurance company.  For claim settlement, he was advised to submit all his car repairing bills first. Upon successfully submitting all his car repairing bills to the insurance company, he later got the reimbursement. Arun's car was severely damaged in a cyclone. The very next day, he informed his insurance company about the incident and raised a claim request. He visited the network garage of his insurance company and got his car repaired without paying anything. The insurance company directly paid the repairing bills of his car to the network garage as Arun had opted for a cashless claim settlement.

Factors That can Cause a Car Insurance Claim to be Rejected

There are a lot of reasons that can cause a claim to be rejected and many of these reasons hold true for both the claim processes.

Here are some of the top reasons for your claim (garage and hospital) to get rejected:

Claim for the damages done to your insured car:

  1. If you drink and drive, the claim will be automatically rejected.
  2. If the company finds out that you have tried to create a false picture of the accident, then the claim will be rejected.
  3. If you were found to be driving without a driver’s license at the time of the accident, the insurer has the right to reject the claim.
  4. If you do not make the claim on time, it will get rejected under the company’s terms and conditions.
  5. If you have missed the last insurance renewal, you will no longer be eligible for the claim to be processed during that period.
  6. If you are driving a car that is still not truly yours on paper, the claim will be rejected. This is the reason why it is advised to not drive a car if the RC and car insurance policy are yet to be transferred to your name.

Claim for the personal accidental cover (at hospitals):

  1. If you exceed the limit of the insured sum that you get on a yearly basis, the claim will get rejected.
  2. If the treatment you received falls under the list of exclusions in the claim policy, the insurer will reject the claim.
  3. If there is any misrepresentation of data during the declaration, it leads to the rejection of the claim.
  4. You need to apply for the claim as soon as possible. If you exceed the time limit, then your claim will be rejected.

Now that you know the major differences between reimbursement and cashless car insurance claims, you should be able to weigh in on the better option. Many believe that the cashless claim process is much smoother, as it does not put a lot of financial burden on the policyholder. If you do choose such a policy, you must do your research thoroughly to identify a cashless car insurance policy that has a wide network of garages and hospitals. 

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