In this article, Anu Bhatnagar discusses legal options you have if your insurance claim is rejected.

Not having an insurance policy means taking a gamble and hoping that things will work out for the best

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The fundamental aim of insurance providers is to produce you with a sort of protection against a risk. Once you aren’t protected or not insured, you may not be remunerated for your loss.

Insurance Claim – What is it

It is well said legal maxim ‘Ubi Jus Ibi Remedium’ which means in general that where there is right there is a remedy. Legislature or an administrative authority provides an assurance that it will protect for any damages that have occurred during that activity.

On this particular note, for example-

• If a person is travelling on an overcrowded transport (let’s say Bus) and meets with any misfortune or mishap. Then that person (if insured) may claim or request for an application regarding the compensation to be awarded under the insurance policy.
• In an ordinary language, an Insurance claim can be understand as whoever has taken the policy under any sort of insurance scheme (Life Insurance, Property, Health, Auto Insurance, Home) then the person(policyholder) may claim for compensation or insurance from Insurance company (Insurer).

Who can claim Insurance Scheme under Insurance policy

• Insurance claim can be made by policyholder, their legal heirs, and any person who is authorized by any court of law. It must be understood that the third party who is claiming for compensation can only be awarded through the policyholder not directly.
• No compensation in lieu of accident or mishap, shall be used for any recovery of loan or any mortgage, and if it found that the third party is doing so then, the person to whom the policy is claimed have right to claim.

There are certain obligations which must be made by the policyholder in order to fulfil any mishap or accident when claiming compensation under the insurance policy.

Whenever the person gets into contract, all the legal aspects must be completed with free consent or without any hindrance.

As per the contract act it is advised that all the terms and condition must be read before signing any contract. This process of recognizing all important terms and conditions before proceeding for any contract because the day policyholder claims should not get surprised.

Obligations are the essentials which must be fulfilled by the policyholder before moving for any insurance claim under the insurance policy. Some of them are to be mentioned below:

• Intimation or Report to me made to the Insurer just after accident or as soon as possible or the way it is mentioned under that insurance scheme. It is suggested that any claim must be followed by a write up, or through a formal application.
• It is an obligation at the part of the policyholder to fill the claim form with good faith and mention concrete information or potential points regarding an accident, so that it must be well understood by the insurer.
• Policyholder must cooperate with the Insurer in case when he /she is verifying or investigating any claim made by him. All relevant questions which are related with accident must be answered properly.
• In the case for insurance claim, it is to be noted that that the policyholder are required to surrender their rights on the property, only when the policyholder must be provided with full compensation.

Rights of the policyholders Related with Insurance Claim

A person creating a claim has bound rights relating to the contract. The IRA has created these rights clearer by provision pointers on Claims Management for the Insurance business below section 3A of insurance Act. The rules, issued in Gregorian calendar month 2012, are aimed toward creating insurers settle claims promptly and during a truthful manner. The rules have created it clear to insurance corporations that an individual creating a claim has the subsequent rights:

1. To be told concerning the procedures, formalities and time frames for claims settlement as contained within the insurer’s manual on claims handling.
2. To be given Associate in Nursing acceptable claim form(s) and a listing of specific documents that will be needed once ling a claim and any extra info necessary in handling the claim; If a claim is permissible, the underwriter shall settle it expeditiously;
3. wherever more investigation is important to work out whether or not the claim is collectable, the underwriter shall apprize the applicant consequently and wherever a service supplier is appointed to research the claim, the applicant ought to be created tuned in to the action being taken;
4. Upon receipt of the investigation report, the underwriter shall, inside seven (7) days, create a suggestion to pay or decline the claim and supply reasons for declining to pay;
5. Wherever assessment of a claim has been distributed, a replica of the assessment report shall be free to the applicant upon request;
6. Wherever the underwriter isn’t to blame for any a part of the claim, the underwriter shall promptly apprize the applicant of this truth and justify the reason(s) why;
7. If the quantity offered for settlement by the underwriter is respectful from the quantity requested by the applicant, the underwriter shall justify the explanation for the distinction to the claimant;
8. Each underwriter, upon sick through substitution, shall promptly refund to the insured the surplus earlier paid to them.
9. A claim that’s according lated by the applicant shall not be declined while not establishing whether or not the reason(s) for the late notification was/were excusable or not.

Reasons for Rejection of an Insurance Claim

You purchase insurance to make sure that you just and your family will keep going any money hardship owing to hospitalisation, prolonged medical treatment or unfortunate end.

What if the insurer rejects your claim? Everything can opt for a toss. You were banking on the insurer to support you/your family however they need with courtesy declined to pay something.

Reasons are mentioned below:

• Lack in understanding the terms and conditions properly.

For example, if there is insurance policy of providing cap for cataract of, 30,000/- and the policyholder started their treatment at any five star hotel then, this claim can be rejected on the basis of] lack of understanding the terms and conditions properly.

Technical terms under the policy that are difficult to understand at the part of policyholders. Though this reason is not justified.

• At the time of purchase if the policyholder, intentionally withheld the important information then at the time of claim he/she can’t take excuse of mistake.
• Negligence at the part of policyholder, when finalizing the insurance policy. For instance, if policyholder gone through all schemes and in the end he/she made accountable an insurer to sign it on his behalf. This mistake can’t be creating right to claim.
• It has been seen from the customer’s complaint that the Insurance Company prepares fake rejection paper just to manipulate the policyholder. But, in this case this act won’t exclude the right to reject the claim.

In the case of National Insurance Co. Ltd vs Nitin Khandelwal case no.Appeal (civil)  3409 of 2008

Facts of the case were that an appellant (policyholder) sent his vehicle to bring his children from the school. Amid of the journey, after sometime few people stopped the vehicle and did misbehave with the driver. Afterwards, they ran away and left the driver under the sewage. Immediate actions were taken by the policyholder, lodged a FIR and intimate an Insurance Company regarding the misfortune. It was held by the National Commission that in cases like theft of vehicle; Insurer can’t look upon the nature of use of the vehicle and hence shall not reject the insurance claim on that sole basis.

Remedies provided by Law under Rejected claims under Insurance policies

It has seen from most of the cases that instead of taking due diligence or utmost care, rejection of claim still happen.

Few questions are resolved by this article like, options available for policyholder for claiming rejection etc.

Following are the procedure by which the policyholder may seek resolution

1. Approach IRDA, an Insurance Regulatory and Development Authority
2. An Approach to Insurance Ombudsmen under Rule 12 of Redress of Public Grievances 1998
3. Approach to Alternative Dispute Resolution (ADR), under any specific policy
4. An Approach to Consumer forum or court of law

Firstly look on the model given under Insurance Regulatory and Development Authority

Fig 1 Source: IRDA

IRDA, an Insurance Regulatory and Development Authority (Approach 1)

Before you intensify touch on IRDA, you ought to have:

1. Approached the grievance redressal cell of the underwriter or the Insurance Company. Provided all the supporting documents and brought acknowledgement of the criticism. You’ll be able to additionally drop e-mail to Grievance Redressal Cell of the insurance firm.
2. If the underwriter doesn’t respond and resolve the problem to your satisfaction among fifteen days from the date of criticism, you’ll be able to intensify to IRDA.

How does one step up the pertain IRDA?

You can approach the Grievance Redressal Cell of the patron Affairs Department of IRDA in either of following ways that.

• Call Toll-Free range 155255 or 1800 4254 723
• Send e-mail to complaints at irda.gov.in
• Register your criticism through Integrated Grievance Management System (IGMS).
• Send a letter or fax (040-6678 9768) to IRDA together with your criticism. You’ll be able to notice the criticism kind and address here.

Insurance Ombudsmen under Rule 12 of Redress of Public Grievances 1998 (Approach 2)

Insurance Ombudsman has power under Section 12(1)(b) in the Redressal of Public Grievances Rules, 1998 to act as a counsellor or mediator which are related to any partial or total repudiation of claims by an insurer.

In addition to this, the person in authority shall give in writing about the settlement done between in the policyholder and the insurer.

This is to be noted that the decision made by the Insurance shall be binding and final on both the parties.

Whenever the policyholder wants to approach Insurance Ombudsman, he/she may approach without any layer too. You must approach the Insurance investigator beneath whose jurisdiction the branch or workplace of the underwriter falls. You’ll see the whole list of investigator addresses here.[1]

Consumer forum or a court of law (Approach 3)

This is the ultimate recourse. Once increase to IRDA or approaching Insurance investigator (in choose cases) doesn’t work, you’ll invariably take the fight to client forum or civil courts.

By the way, you’ll approach the courts while not approaching IRDA or investigator. However, this is often seemingly to be a long method and not restricted by timelines as in 1st 2 ways.

So, it’s higher if your grievance gets resolved within the 1st 2 ways.

Reference

[1] Consumer Education Website, Address of Ombudsmen available at http://www.policyholder.gov.in/Addresses_of_Ombudsmen.aspx