Insurance provides you with the peace of mind. We have all experienced a health emergency, damage to our property, a car accident or a life insurance claim. We file claims in order to recuperate when we find ourselves in an unfortunate situation. But what do you do if your claim is unexpectedly declined?
There are thousands of individuals, here in India, that deal with this frustrating situation every year. If you have had your insurance claim declined, do not panic. Legally and procedurally, you have options available to you to appeal and secure compensation.
In this guide, you’ll learn the common reasons why insurance claims are rejected, steps to challenge the rejection, legal remedies under Indian law and key case laws and your rights as a policyholder.
Why Do Insurance Claims Get Rejected in India?
Here are the most common reasons:
- You Forgot to Disclose Something You Didn’t Think Was Important: Even the most trivial things like a blood pressure issue for one client became the grounds for denial. Report everything, no matter how insignificant you think it is.
- The Claim was Reported Late: Many insurers require you to contact them within 24-48 hours of, say, a medical emergency or an accident. If you are late, the insurer will deny your claim based upon that reason alone.
- The Policy was Not Active: One of my clients had her motor insurance claim denied because her policy had lapsed only a week prior to the accident. Always renew your policy on time.
- They Claimed It Was “Excluded”: Your policy does not cover every claim situation. When you read the exclusion section pay particular attention. For example, most life policies do not cover death caused by being intoxicated.
- Missing Documents: In one case, they claimed they were unable to complete the claims process as the hospital records were not complete. However, the client had submitted everything they could. Make sure to have multiple copies of any reports, bills, FIRs, etc.
- They Suspected Fraud (And There Wasn’t Any): Sometimes, insurers are so careful that they think the claims are inflated / fake even when they are genuine claims. In a situation like this you must escalate the claim.
Here’s What to Do After a Claim is Denied
Step 1: He Asked the Insurer for the Exact Reason
Instead of calling the helpline, he sent a formal email asking for a written explanation. That helped him when he escalated later.
Step 2: He Re-read his Policy
He went through every clause, especially exclusions and claim process timelines. You’d be surprised how often insurers misinterpret their own terms.
Step 3: The Client Filed a Written Grievance
He addressed it to the insurer’s Grievance Redressal Officer. He attached:
- My policy and claim numbers
- Rejection letter
- A detailed rebuttal with supporting documents
As per IRDAI norms, they had to respond within 30 days, and they did.
What If Your Insurer Still Refuses to Pay?
Option 1: Lodge A Complaint with the Insurance Ombudsman
The client must understand that Ombudsman is considered like a speedy consumer court that you don’t have to hire a lawyer. Hundreds of consumer cases go through the Ombudsman office every year.
How to proceed:
- File the complaint within 1 year of rejection
- Ensure the claim amount is ₹50 lakh or less
- Attach all documents (rejection letter, policy, grievance reply)
In my case, just filing with the Ombudsman pushed the insurer to call and negotiate.
Option 2: Register Complaint with IRDAI
The client also lodged a complaint via IRDAI’s IGMS portal: www.igms.irda.gov.in. They don’t resolve individual claims, but they monitor insurer behaviour, which can push companies into action.
Option 3: File a Case in Consumer Court
When there was a client with a similar issue, he approached the District Consumer Forum. It took a few months, but he won the case, and the insurer paid, along with compensation for harassment.
Where to file:
- District Commission: ₹0–50 lakh
- State Commission: ₹50 lakh–₹2 crore
- National Commission: ₹2 crore+
- Deadline: File within 2 years of your claim denial.
Landmark Case Laws Can Help You in Court or Negotiation
- LIC v. Asha Goel (2001): Even if you forget to mention minor health issues, the court says insurers can’t deny claims on trivial grounds.
- Satwant Kaur v. New India Assurance (2009): Deliberately hiding major illnesses is a valid reason for rejection.
- Religare Health v. Harish Kumar (2018): If the insurer can’t prove a pre-existing condition, they can’t deny the claim.
- Sehtia Shoes v. National Insurance (2008): Delayed intimation isn’t enough to reject a genuine claim. This helped me argue my delay was due to a medical emergency.
Know Your Rights: They Make a Big Difference
IRDAI Regulations (2017): Insurers must settle your claim fairly and transparently. You’re entitled to know the real reason for rejection.
Consumer Protection Act (2019)
You can claim:
- Refund or compensation
- Damages for mental stress, harassment, or delay
Doctrine of Utmost Good Faith: Both you and the insurer must be honest. If the insurer hides something or tricks you, you can challenge them.
Doctrine of Contra Proferentem: If the policy language is unclear, the benefit goes to you, the policyholder.
How to Avoid Claim Rejection in the First Place?
After going through all this, here’s what you should too:
- Be 100% honest when filling insurance forms
- Understand your policy terms, not just the premium
- Keep digital and printed copies of every report and document
- Inform the insurer immediately after any incident
- Pay premiums on time
- Renew without gaps to avoid “lapsed policy” excuses
Final Words
Insurance companies bank on the hope that you’ll give up after rejection. But you don’t have to. Simply go through the process of asking the Insurance Ombudsman for help, know your rights, and if want to cherry on the cake you can always take them to court.
With the right paper work (and timelines) and if you are persistent, you can change a rejection into a resolution. If you’re stuck right now, read your rejection letter, and send that grievance email. You would be surprised what happens when they realize you know your rights.
One can talk to lawyer from Lead India for any kind of legal support. In India, free legal advice online can be obtained at Lead India. Along with receiving free legal advice online, one can also ask questions to the experts online free through Lead India.
FAQs
1. What is the time limit to challenge a rejected insurance claim?
You must file a complaint with the Insurance Ombudsman within 1 year of rejection. The consumer court has a two-year limitation period from the date the claim was denied.
2. Do I need the help of a lawyer to fight insurance claim rejection?
No, you can represent yourself before the Ombudsman or Consumer Forum. However, hiring a lawyer can help in complex as well as high-value cases.
3. What documents are needed to challenge an insurance claim denial?
You should submit the original policy document, rejection letter, all claim-related documents (e.g., bills, reports, FIR), and any grievance correspondence with the insurer.
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