Why Are Insurance Claims Rejected for Financed Cars?

JAKARTA, KOMPAS.com – Many car owners feel secure knowing their financed vehicles are covered by insurance. However, some only realise the protection type has changed when filing claims in the later years of their loan term, leading to rejected claims. This occurs because vehicle insurance coverage does not always remain consistent throughout the loan period.

Iwan Pranoto, Head of PR, Marcomm and Events at Astra Insurance, said consumers must understand the insurance type specified in their policy to avoid disappointment when making claims. While financed cars typically have insurance coverage during the loan term, the protection type may not stay Comprehensive until the end.

For example, financing companies might provide Comprehensive coverage for the first three years, then switch to TLO for the following two. Vehicle owners should be aware of when the coverage changes to adjust their expectations in case of damage.

Comprehensive insurance offers broader protection, covering almost all types of damage, from minor scratches and dents to accident-related issues and vehicle theft as per policy terms. In contrast, TLO insurance only compensates for severe damage where repair costs reach at least 75% of the vehicle’s value or in cases of theft.

Iwan noted many consumers assume their vehicles remain fully protected, unaware the coverage has shifted to TLO. Therefore, owners are advised to regularly check their insurance policy documents, including coverage periods and protection types.