Insurance claim rejected in India: which route to take, and when

Can an insurance company reject a claim?

Yes, but only on a ground the policy or the law gives it, and it has to say which. Insurance claim repudiation is the formal refusal of a claim, in whole or in part, by a letter that should name the clause relied on. A message from a TPA saying the claim is "not payable" is not a reasoned rejection, and you are entitled to ask for one.

Treat the rejection letter as the insurer's whole case. Insurers are slow to add new grounds once a dispute begins, and forums look sceptically at grounds raised for the first time in reply. So the first job is to read the letter against the policy wording for the year of the claim, and to work out which kind of ground it is: a disclosure ground, an exclusion, a waiting period, a procedural lapse, or a dispute over the amount.

Two rules help the policyholder throughout. The insurer must prove that an exclusion applies; you do not have to prove that it does not. And where a clause can fairly be read two ways, it is read against the insurer that drafted it, a principle lawyers call contra proferentem.

Why do insurance companies reject claims?

Health insurance claim rejected

The common grounds are non-disclosure of an illness at the proposal stage, treatment within a waiting period, a permanent exclusion, an admission the insurer says was not medically necessary, and gaps between the hospital record and the claim form. Under IRDAI's 2024 master circular on health insurance, the waiting period for pre-existing diseases cannot exceed 36 months, so a ground based on a longer period should be questioned. A refused cashless request is not a rejection of the claim; you can still pay the hospital and file for reimbursement within the policy's time limit.

Term insurance claim rejection reasons

Death claims on term policies are usually rejected for something said or left out in the proposal form: smoking or tobacco use, diabetes or blood pressure, an earlier hospital admission, other life policies held, or an income figure the agent filled in. Other grounds are a policy that lapsed for unpaid premium before the death, the suicide exclusion in the policy's first year, and a death that falls under a rider exclusion rather than the base cover. The timing matters most. A death within the first three years usually triggers an investigation; after that, Section 45 shuts the door on most of these grounds.

Motor insurance claim rejected

Own-damage claims are refused for driving without a valid licence, driving under the influence, a private vehicle used for hire, engine damage from driving through water without an engine cover, or late intimation of a theft. Two court rulings answer some of these. In Gurshinder Singh v Shriram General Insurance (2020) the Supreme Court held that a genuine theft claim cannot be refused merely because the insurer was told late, where the police were told promptly. And in Bajaj Alliance General Insurance v Rambha Devi (2024) a Constitution Bench held that a light motor vehicle licence covers transport vehicles within the light motor vehicle weight class, so a rejection on that ground alone is often wrong.

Can insurance companies reject a claim after 3 years?

For life insurance, no. Section 45 of the Insurance Act, 1938 says a life policy cannot be called in question on any ground after three years from the date it was issued, the risk started, it was revived or the rider was added, whichever is latest. Within those three years the insurer can reject for fraud or for a misstatement of a material fact, but must give its grounds in writing. Even then, a fraud ground fails if the policyholder shows the statement was true to his knowledge, that there was no deliberate intention to hide the fact, or that the insurer already knew it.

For health insurance the protection is the moratorium. Under IRDAI's health insurance master circular of May 2024, once a policy has run for 60 continuous months, counting renewals and portability, no claim can be contested for non-disclosure or misrepresentation except on proven fraud, though the permanent exclusions in the policy still apply. Before May 2024 the period was eight years.

Motor, fire and other general policies have no equivalent bar. Each claim is judged on the policy terms for that year, which is why the wording of the year of loss matters so much.

What to do if your insurance claim is rejected

1. Get everything in writing. The rejection letter naming the clause, the full policy wording for the year of the claim, and a copy of your proposal form if the ground is non-disclosure. Ask the insurer for the proposal form if you never received it.
2. Collect your own evidence. Discharge summary, case papers, the treating doctor's notes, prescriptions, the surveyor's report, the police complaint in a theft, and every query letter from the TPA with your replies.
3. Check the dates. When did the illness begin, as the records show it? When did cover start, and has it been continuous? These two dates answer most non-disclosure and waiting-period grounds.
4. Write to the grievance officer. State the ground you dispute and why, attach the papers, and ask for the claim to be reviewed. Register it on Bima Bharosa as well, so there is a record the regulator can see.
5. Do not accept a part payment as final. If you take money while you dispute the balance, say in writing that you take it under protest.

Which route fits your claim?

There is no single right forum. The table shows where we would usually start in common situations.

The grievance officer and an IRDAI complaint through Bima Bharosa

Every insurer has a grievance redressal officer. Under IRDAI's 2024 master circular on policyholders' interests, the insurer must acknowledge a grievance at once and resolve it within two weeks. Bima Bharosa is IRDAI's online grievance system: a complaint registered there goes to the insurer and is tracked by the regulator, and you can also call IRDAI's toll-free number 155255. IRDAI does not decide individual claims or award money. Its value lies in the record and the pressure, which is why it comes before the forums that do decide.

Insurance ombudsman complaint

The Ombudsman, set up under the Insurance Ombudsman Rules, 2017, is free and can award up to Rs 50 lakh on an individual claim. You must have complained to the insurer first and must file within one year of its reply. The award binds the insurer once you accept it; if you do not, other routes stay open. The conditions, offices and hearing are set out on our Insurance Ombudsman complaint page, where we draft the complaint from Rs 5,000.

Consumer court insurance claim

A rejected claim on a policy you paid for is a deficiency in service under the Consumer Protection Act, 2019. The commission can order the claim amount with interest, compensation and costs. Jurisdiction depends on what you paid as consideration, which for a policy is the premium, so most policyholders file before the District Commission where they live, online on e-Jagriti. Our consumer case for rejected claims service runs the case, from Rs 15,000 for preparation. If you would rather file it yourself, our consumer complaint drafting is from Rs 2,500.

Civil and commercial courts, and arbitration clauses

Large business policies, such as fire, marine or engineering cover, sometimes belong in a civil suit, and insurance disputes of Rs 3 lakh or more are commercial disputes under the Commercial Courts Act, 2015. Many general policies carry an arbitration clause, but it usually covers only disputes about the amount where the insurer has admitted liability. It does not stop a consumer complaint: the Supreme Court has held that an arbitration clause cannot take away the consumer forum's jurisdiction.

Deadlines that start running when the claim is rejected

Most lost cases are lost on time, not on merits. Note these dates on the day the rejection arrives.

Do not run two forums on the same claim at once. The Ombudsman will not hear a dispute that is pending before a consumer commission or a court. And do not assume that time spent before the Ombudsman stops the two-year consumer clock; plan both dates from the start.

What to do next

If the rejection is recent, start with the grievance letter and the Bima Bharosa registration; both are free and both are needed later. While the insurer considers it, gather the medical or survey evidence and the proposal form. Then choose between the Ombudsman and a consumer commission using the table above, and diary the deadlines.

If a vehicle accident injured or killed someone, the claim against the insurer goes to the tribunal, not to these forums; our motor accident claims page explains that route. For disputes with insurers, banks and service providers more generally, see our consumer litigation page.

We work from our office in Sanpada, Navi Mumbai, and act before the consumer commissions in Mumbai, Thane and Navi Mumbai. Policyholders elsewhere can send the rejection letter and policy by email and speak to us by phone or video. If a hearing has to be attended outside our area, we say at the first consultation how that will be handled and what it will cost.