Rejection letters are frequently short and vague. The first step is always to force the insurer to commit to a specific reason in writing, because that reason is what you then dismantle.
The escalation ladder
- Written rejection with reasons, and a copy of the policy document, the proposal form and the claim file. Ask for these expressly.
- Internal grievance redressal of the insurer. Every insurer must have one, with defined timelines.
- Insurance Ombudsman, under the Insurance Ombudsman Rules. It is free, no lawyer is needed, it covers personal lines up to a prescribed value, and the award is binding on the insurer though not on you. This is the most under-used remedy in Indian insurance.
- Consumer commission, on the footing of deficiency in service. You may also complain to IRDAI through the Bima Bharosa portal, though that is a regulatory grievance rather than an adjudication.
Section 45 is the strongest weapon in a life claim
Section 45 of the Insurance Act, 1938 provides that a life insurance policy shall not be called in question on any ground whatsoever after three years from the date of the policy, or its revival or rider, whichever is later. Within three years, the insurer may repudiate for fraud or misstatement only by communicating the grounds in writing. Insurers still reject old policies for alleged non-disclosure, and Section 45 answers that completely.
Section 45 of the Insurance Act, 1938 provides that a life insurance policy shall not be called in question on any ground whatsoever after three years from the date of the policy, or its revival or rider, whichever is later. Within three years, the insurer may repudiate for fraud or misstatement only by communicating the grounds in writing. Insurers still reject old policies for alleged non-disclosure, and Section 45 answers that completely.
The common rejection grounds and how they are met
- Non-disclosure of a pre-existing condition. The insurer must show the fact was material and that it was suppressed. Conditions the insured did not know of, or which are unrelated to the cause of the claim, have repeatedly failed to justify repudiation.
- Delay in intimation. The Supreme Court and the IRDAI have both said that a genuine claim should not be rejected merely for delayed intimation, particularly in motor and health claims where the delay is explained.
- Policy exclusion. Read the exact wording. Exclusions are construed strictly against the insurer, since it drafted the contract.
- Cashless denied at the hospital. Denial of cashless is not rejection of the claim. Pay, collect all documents, and file for reimbursement.
Keep the proposal form
Most disputes turn on it. If an agent filled it and you signed a blank or pre-filled form, say so and prove it. That fact has defeated many non-disclosure defences.