The whole purpose of entering into an Insurance Policy or Contract with the Insurer/ Insurance Company is claim of Insurance by the insured on the happening of the unforeseen event or contingency or in simpler term insurance claims. Hence, the pivotal point of insurance is insurance claim. However, several times, a claim of insurance made by the insured on the happening of the unforeseen event is rejected by the Insurance companies.

Rejection of Insurance claim- Grounds

Some of the most common grounds on which an Insurance company rejects an insurance claim in India are:

Lack of Information in the Proposal Form: This is one of the most common grounds on which insurance companies reject a claim. Hence, it should be the primary duty of the insured to disclose all the material facts pertaining to the subject of insurance.

Concealment of Information: Whenever, the insured conceals any material information that would otherwise be important for the decision making of the insurer then it would give the insurance company or the insurer, a ground to reject the claim. The foundation of Insurance policies is based on the principle of “uberima fides” i.e. utmost good faith. It literally means that the parties to the insurance contract shall deal in good faith and shall disclose all material facts with reference to the insurance policy in question. The material facts in a policy were defined by the Hon’ble Court in the case of Banarasi Devi v. New India Assurance, wherein the Court enumerated that “misstatement or suppression of material facts is in a sense necessary in order to deprive him of the benefit that accrues in his favor under the contract.”

Pre-existing Condition: This is especially prevalent in the health insurance or life insurance claims. If there seems to be an existence of any condition present before signing the insurance policy then the same could lead to the rejection of the claim. Moreover, it would also constitute fraud or deceit. The same was reiterated by the Hon’ble Court in the case of New India Assurance Co. Ltd. vs Shiv Kumar Rupramka.. It is in consonance with Section 45 of Insurance Act, 1938.

Delay in Filing the Insurance Claim: It should also be noted that the insurance claims should be filed within the limitation period otherwise it could lead to the rejection of the insurance claim. However, if there is a reasonable ground to believe that there was a justifiable reason for delay then the time period could be waived off. A similar point was upheld by the Hon’ble Court in the case of Om Prakash v. Reliance General Insurance.

Negligence in paying premium for the Policy: Lapse in payment of premium amount of the Policy to the insurer is also a ground for rejection of insurance claims. The Supreme Court while emphasizing on the duty of the insured of paying premium in the case of Life Insurance Corporation of India & Anr. v. Dharam Vir Anand, laid down the guideline regarding the payment of premium to the insurance company.

In view of the aforesaid common grounds for rejection of insurance claims, some of the insurance claim tips to avoid rejection of insurance claim can be listed as under:

1. To fill in the particulars of insurance policy form carefully and adisclose all material facts related to the subject of insurance in question

2. To fill in the insurance claim form and sign it

3. Medical records and discharge summary in case of health insurance claims

4. FIR copy in case of motor vehicle accident claims

5. Proof of identity of nominee, proper documents

6. FIR/ Police report, if FIR has been filed in case of death of the insured

7. Property papers in case of home insurance

8. Avoid delay in filing of insurance claim on the happening of the unforeseen event

9. Avoid delay in filing FIR in relevant cases like motor accident claims etc.

10. Timely payment of premium amount

The aforesaid insurance claim tips shall be helpful in insurance claim settlement and avoid the situation of rejection of insurance claims in India.

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