Refusal of car insurance by Bajaj Alliance

I Babu Alexander on behalf my daughter Mrs.Bhavana babu, owner of Maruti /Ritz (Registration No.TN/20?BX/4704 at Chennai) making this representation.
I was driving this vehicle on 31st after noon, when I was returning home for lunch around 12.30 pm, near my house there was a water log due to recent rain. I was very slow and while I was crossing the water log, a small stone hit the front bottom of my vehicle, and suddenly I could see only smoke coming up. I got down from the vehicle and saw oil spilled up all over. On the dash board also indicator lamp was burning, I immediately called up the Popular Vehicle and services Ltd Chennai, care service (the first two services was carried out by the above firm only). Their service vehic le came around 3 pm and the mechanic cranked the vehicle to the centre of the road and towed the vehicle to their Body Shop ay Virugam bakkam. On first being the holiday, the 2nd after my repeated follow up evening around 4pm the service people from the body shop called me and my daughter to come to the service centre (body shop) to sign the Insurance claim. The claim form was preferred. The mechanic said it may not be a major, and only the oil filter is knocked away and oil leaked, Though they promised me that they would keep me informed of the position, till 7th no feed back was received from the service person. On my follow up to day morning with Srikumar-Manager, around 12.30 pm the Insurance Survivor from Bajaj Alliance General insurance co. Ltd ( Certificate Cum policy No. BA5049779) called me up and said since the estimation given by the service people was for Engine jam, which the Bajaj Alliance General insurance co. Ltd has rejected. I also received a call from Mr.Srikumar-Manager around 1.30pm and asked me to come to body shop and he has taken a signature on my claim form with a remark as “claim rejected and the repair to be carried at the cost of customer) I have signed the claim as I want the vehicle back early.
However I am making the payment on protest, that the rejection of my claim is totally unjustified and unacceptable, The damaged caused is only by an accident and the vehicle was parked on the road near the accident spot, and the service person was informed immediately. Even accepting without admitting the argument of the Insurance Surveyor that any damage due to failure on the part of driver (running without oil resulting in damage is not payable), the vehicle was serviced 15 days before by Popular Vehicles and Services, and immediately after the accident on 31st the vehicle was parked on the road itself, service people came and towed the vehicle. If at all I drew the vehicle I can accept the argument that the vehicle was driven without oil and resulting in damage. My case if at all any damage could have happened to Engine due to nil oil on the Engine, it must have happened at the service centre / body shop only. The vehicle was at their custody more than 7 days and the vehicle was not the on the same shed / spot where it was on 2nd when I visited them on 7th Jan-10. There was no feed back from them for about seven days.
Second point of my contention is that Bajaj Alliance General insurance co. Ltd cannot totally reject my claim, as there is only a case of accident involved and no negligence on the part of driver, and without verifying the facts of the circumstances due to which the alleged engine jam had happened / complained. Whether engine jam was really happened has to be assessed. Their total rejection ab-initio is unjustified and warrants legal remedy, including Insurance Ombudsman, and further appeal if required.
Third point I would like to reiterate that, if that the manufacture has kept a oil filter so low on the engine side, resulting which a small hit by a small stone can create such ciaos, then something wrong with the design, and needs guards for protection. Even small cars of Maruti Zen earlier model which I was holding earlier did not have such danger)
In all I am making payment for repair of my vehicle, without prejudice to my right to approach the legal forum (s ) for my claim, individually / collectively for damages caused to my vehicle on transit or at Popular Vehicle and services Ltd service shed, where the vehicle was kept at their workshop more than 7 days and might have handled by their person wrongly / knowingly or unknowingly, tried to crank the vehicle when there was no oil, totalling which any rejection of my claim by the M/s. Bajaj Alliance General insurance co. Ltd ( Certificate Cum policy No. BA5049779), without verifying the veracity of the claim, and finally with the Manufacturer for the defective design for having designed without guard, which can cause havoc during a long drive for having priced the vehicle so high and caused for all actions and loss.

Any feed back if any would be appreciated as early

Babu Alexander