What to do if your insurance claim is rejected

A repudiation is a decision that the claim is not payable. It should identify the policy clause relied on and the facts the insurer says bring the claim within it. If your letter does neither, that is itself a complaint point — a bare statement that the claim 'does not fall within the scope of the policy' is not a reasoned decision.

A short settlement pays part of the claim. The mechanisms are predictable: a room-rent or ICU sub-limit that triggers a proportionate deduction across the entire hospital bill; a per-illness or per-procedure capping; a co-payment; a deductible; and the schedule of items an insurer classifies as non-payable — consumables, gloves, administrative and record charges and so on. Short settlements are disputed less often than repudiations and reversed just as often.

A cashless denial happens at the hospital desk, before or during admission, when pre-authorisation is refused by the insurer or the third-party administrator. It is a decision about pre-authorisation, not about liability. You can pay the hospital, collect the complete record, and file a reimbursement claim, which is assessed afresh with the full documentation the pre-authorisation stage never had. Many claims denied cashless are paid on reimbursement.

There is also a fourth category worth naming: a claim that is neither paid nor rejected, but sits in an endless loop of document queries. Treat repeated queries as a deemed dispute. Send the documents once by a traceable route, keep the acknowledgement, and start the grievance clock rather than waiting for the next request.

Whichever it is, the response starts the same way — get the decision in writing, in full, with the clause. Insurers communicate a great deal by phone and by the third-party administrator's portal messages. None of that is usable at the Ombudsman. Ask for a signed or emailed decision letter and keep it.

Read the clause against your actual policy wording, not against the brochure or the agent's description. The policy document with its schedule, the endorsements and the customer information sheet are the contract. Ask for a certified copy of your proposal form at the same time — for any dispute involving non-disclosure, the proposal form is the document the whole case turns on.

Non-disclosure of a pre-existing condition is the most-used ground in health insurance. The insurer's case is that you knew of a condition, or had been advised or treated for it, before the policy commenced, and did not declare it. The defences are specific: the condition was not diagnosed or treated before the policy; the proposal form was filled in by the agent and never read back to you; the question asked was not the question the insurer now says it asked; or the moratorium period has run.

That moratorium is the strongest single protection in Indian health insurance and the least known. After sixty continuous months of coverage — with portability and migration counting towards it — a claim cannot be contested on grounds of non-disclosure or misrepresentation, only on established fraud. Continuity depends on renewing within the grace period, which is why a lapse and fresh policy is much more damaging than it appears at the time.

Waiting periods are the second big ground. Policies carry an initial waiting period, a longer waiting period for specified diseases and procedures, and a pre-existing disease waiting period, subject to a regulatory maximum. Where a policy has been ported, waiting periods already served with the previous insurer carry over — insurers do not always apply this correctly, and it is a routine, winnable dispute.

'Not medically necessary' and 'could have been treated as an outpatient' are used to reject short admissions, particularly for fever, dengue and observation cases. The counter is the treating doctor's written justification for admission, contemporaneous vitals and investigation reports. A letter from the treating physician explaining why inpatient care was clinically required is the single most useful document to obtain, and it is much easier to get in the week after discharge than a year later.

Permanent exclusions and standardised exclusions are a legitimate ground where the policy actually contains them, but the regulator has standardised exclusion wording across the industry, and an insurer relying on a non-standard or ambiguously drafted exclusion is on weak footing. Ambiguity in an insurance contract is construed against the insurer who drafted it.

Late intimation and late document submission are used far more often than they can bear. Delay is a procedural breach, not a substantive one, and the regulator's position is that genuine claims should not be rejected only for delay where the delay is explained. Put the explanation in writing.

For life insurance, the three-year rule is decisive. A life policy cannot be called in question on the ground of misstatement or suppression of a material fact after three years from the date of commencement, the date of the last revival or the date of a rider, and no ground at all can be raised after that period. Within the three years, the insurer must communicate the ground in writing with the materials it relied on. An insurer repudiating a four-year-old policy for non-disclosure is repudiating against the statute.

Assemble the file before you write anything. You need the policy document with the schedule and endorsements, the proposal form, the customer information sheet, the premium payment record, the claim form, all hospital records including the admission notes and discharge summary, every bill and receipt, all investigation reports, the pre-authorisation correspondence, and the rejection letter itself. Number the pages. This bundle is what every stage after this will run on.

Write to the insurer's grievance redressal officer, not to the branch or the third-party administrator. Every insurer is required to have a grievance redressal officer with published contact details and a defined grievance procedure. State the policy number, the claim number, the date and reference of the rejection, the clause relied on, and precisely why it does not apply — one numbered point per reason. Attach the file. Send it by email and keep the delivery record.

Ask expressly for three things: a reasoned decision, the specific policy clause and the proposal form entry relied on, and confirmation of the date on which cover commenced and of any continuity credited from a ported policy. Insurers frequently reverse at this stage rather than commit those things to writing.

If there is no resolution within the prescribed period or the resolution is unsatisfactory, register the complaint on IRDAI's Bima Bharosa portal, or use the regulator's grievance call centre or complaints email. Bima Bharosa registers the complaint against the insurer, routes it, sets a clock and lets you track the status. It is also the record that you escalated, which the Ombudsman will ask about.

Understand what this stage achieves. The regulator monitors the insurer's handling and can act against systemic conduct, but it does not decide your claim. Where a complaint is closed as 'resolved' because the insurer restated its rejection, that is not an adverse finding against you — it is the point at which you move to the Ombudsman.

File with the Insurance Ombudsman for the area where the insurer's branch or office you dealt with is located, or where you reside. The complaint is in writing, signed, with the documents attached, and there is no fee and no requirement for a lawyer. It must be filed within one year of the insurer's rejection, and only after you have first complained to the insurer and either received a rejection or had no reply within the prescribed waiting period.

Attend the hearing. Ombudsman proceedings are informal, conducted in person or online, and the policyholder speaks for themselves. Take the numbered bundle, a one-page chronology and a one-page statement of what you want. Where both sides consent, the Ombudsman can mediate and record a settlement; otherwise it passes an award. The award is binding on the insurer, which must comply within the period the Rules prescribe and confirm compliance.

If you do not accept the award, you are not bound by it. The Ombudsman's award binds the insurer alone — the complainant remains free to pursue the consumer forum or a civil court. That asymmetry is deliberate and is the reason the Ombudsman is almost always worth trying first.

The Insurance Ombudsman institution operates under the Insurance Ombudsman Rules 2017, as amended, with offices across the country coordinated by the Council for Insurance Ombudsmen. It is a quasi-judicial body created specifically to give individual policyholders a cost-free alternative to litigation.

Its jurisdiction covers individual policyholders and personal lines: delay in settlement, partial or total repudiation of a claim, disputes over premium, misrepresentation of policy terms, non-issue of a policy document, and disputes about the legal construction of policies insofar as they relate to claims. Both life and general insurers, and health insurers, are within its remit.

There is a monetary ceiling on what it can award, fixed by the Rules and raised by amendment over the years. Confirm the current figure with the Council for Insurance Ombudsmen before assuming a large claim is within reach — above the ceiling, the consumer forum route is the one to use.

It cannot take a matter that is already pending before, or has been disposed of by, a court, a consumer forum or an arbitrator. You must choose. Filing in a consumer forum first closes the Ombudsman door for the same dispute.

It cannot entertain a complaint that was never first put to the insurer, and it cannot entertain one filed more than a year after the insurer's decision. Those two gates account for a substantial share of complaints thrown out on admissibility rather than merit, and both are entirely avoidable.

Its timelines are set by the Rules: a recommendation within a month where both parties consent to mediation, otherwise an award within a defined period of receiving all the requirements, and compliance by the insurer within a set number of days of receiving the award. The insurer must confirm compliance to the Ombudsman.

It cannot award punitive damages or costs beyond what the Rules allow, and it does not deal with complaints against agents, brokers or hospitals — only against insurers. A grievance about a hospital's billing goes to the state health authority or the consumer forum, not here.

A rejected insurance claim is a deficiency in service under consumer law, and the consumer commissions have decided insurance disputes for decades. Filing is now largely online, the pecuniary jurisdiction is tiered by the value of the claim, and a lawyer is permitted but not required.

The consumer route has three advantages over the Ombudsman: no monetary ceiling in the way the Ombudsman has one, the power to award compensation for mental agony and litigation costs, and a formal appellate structure. Its disadvantage is time — the Ombudsman generally decides in months where a consumer commission may take considerably longer, and appeals extend that further.

The practical sequence for most people is therefore: insurer's grievance cell, then Bima Bharosa, then Ombudsman, and the consumer commission only if the award is unsatisfactory or the claim exceeds the Ombudsman's ceiling. Because the award binds only the insurer, going to the Ombudsman first costs you nothing except time.

Do not run both at once. If a complaint is pending before a consumer commission the Ombudsman cannot touch it, and an Ombudsman complaint filed while a consumer case is live will be rejected on admissibility.

A civil suit is the residual option and is rarely the right one for a personal insurance claim — it is slower and costlier than either alternative, though it remains available where the amounts or the legal questions are large enough to justify it.

Where the insurer is a public sector company or the grievance concerns a government-run scheme, the central public grievance system is a parallel route that costs nothing to run alongside the others, and it produces a dated, tracked record of the complaint.

Whatever route you take, keep the paper. Dated correspondence, delivery receipts, the numbered document bundle and a chronology are what turn a dispute the insurer expects you to abandon into one it has to answer. The asymmetry these processes are designed to correct is that the insurer has a file and the policyholder usually does not.

Fill the proposal form yourself, read every question, and answer it literally. If an intermediary fills it, insist on reading the completed form before signing and keep a copy. The single most damaging thing in Indian health insurance is a proposal form the proposer never saw.

Declare everything, including conditions you consider trivial or resolved. A declared condition may attract a waiting period, a loading or a specific exclusion — all of which are survivable. An undeclared one is a repudiation ground for the entire policy.

Read the customer information sheet, which insurers must provide in a standard format summarising cover, exclusions, waiting periods and sub-limits. It is the fastest way to find the room-rent sub-limit that will otherwise generate a proportionate deduction on your first big claim.

Renew within the grace period, every time. Continuity of cover is what carries waiting periods forward and what accumulates the sixty months towards the moratorium. A gap resets both.

When porting to a new insurer, get written confirmation of the continuity credited — the waiting periods served and the date from which the moratorium clock runs. Disputes about ported continuity are common and are much easier to win with the confirmation in hand than without it.

Intimate every claim promptly, even where you are not sure it will be pursued, and keep the intimation reference. Then collect the full hospital record at discharge rather than months later: the indoor case papers, the admission and treatment notes, the investigation reports and the itemised bill. Hospitals become dramatically less responsive once the patient has left.