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How to avoid insurance claim rejections

By Naval Goel
December 06, 2015 09:00 IST
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Worried about such an eventuality? Don't worry; here's how you can avoid them

Whether you accept it or not, the greatest fear related with any type of insurance is claim rejection. One of the most common questions that arise in the mind of a prospective customer before selecting a particular policy is: will the insurer settle my claim on time?

As per the yearly report of Insurance Regulatory Development Authority (IRDA), claims rejected by life insurance companies in 2013-2014 was18,423 in the individual life insurance plans, whereas, it was 14,158 in group plans. The number of claims pending at the end of 2013-2014 was 4,497 and in the group it stood at 1922.

These figures will surely make a customer or insured doubtful about the effectiveness of an insurance cover, but it was also mentioned in the report that claims worth Rs 2,265 crore were settled in the last financial year.

Insurance companies are in a business where they are obliged to pay claims. However non -genuine and bogus claims get rejected as otherwise, if the companies accept all claims, it will result in higher premiums for the customer which will not be the ideal case scenario. It is the duty of an insured to follow all the rules and regulations listed in the insurance document for making a claim so that it does not get rejected.

Here are some of the broad reasons of claim rejection and what you can do to avoid rejections...

1. Lack of information

Lot of times it is seen that the policyholders are not aware of exclusions in the plan as most  people do not want to spend their time reading the policy documents and understanding its terms and conditions at the time of buying  a plan.

This is a major mistake that people usually commit as they would not be aware while breaking a rule or condition that it is mentioned in the document. For example, how many people know the conditions for getting the pre-existing disease covered? Usually it happens after completion of 3-4 years of a health insurance cover.


For safeguarding yourself from this, it is essential to read through the policy document thoroughly and familiarise yourself with its terms and conditions before signing. If you have any doubt related to any clause then it is advisable to ask for clarification from the insurer.

2. Disclosure of wrong facts

It is a common reason related to claim rejections. Non-disclosure, wrong disclosure and partial disclosure of important facts such as income, age, work, existing insurance plan, major or pre-existing diseases can result in a rejection.


The simplest way to protect yourself from such situations is to provide all the accurate information to the insurer. Do not hide anything and avoid providing wrong facts. It is essential for the policyholder to understand that the insurance plan is guided by underwriting principles which are completely based on the information which they provide to the insurer. Hence, it is important to provide accurate details.

3. Discrepancy in proposal application

Another reason why insurers withhold claims is that policyholders often abstain from filling their forms and rely on third parties and intermediaries. This leads to serious errors in declarations.


Fill the proposal form on your own. Submit accurate documents at the time of purchasing a plan in an orderly and timely manner to the insurer along with necessary details.

After receiving the policy documents along with the photo copy of the proposal form from the insurer that you filled, you must go through it, check that all the details are correct and in case if you find any discrepancy, inform your insurer immediately and get it rectified.

4. Unessential expenditures

In the general insurance sector, health and motor are the two segments where the incidences of claims rejection are very high. Many times a health insurance company rejects the claim by saying that the process or services were not medically necessary.


It is advisable for you to not include repair charges of pre-existing indemnity or costs not covered under the plan in the claim.

Now that you know the common reasons for claim rejection, we hope that the next time you file a claim, it will get accepted by the company resulting in fulfillment of your financial requirements.

Photograph: Pictures of Money/Creative Commons

Naval Goel is CEO & Founder,

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