Reasons why insurance claims may get rejected

Reasons why insurance claims may get rejected

The concept of insurance, in general, is a contract between an insurer and an insured based on several principles. One of those principles basically stipulates that both parties involved in the contract must act in the utmost good faith. To put it in simple words, the policyholder should exercise utmost honesty and accuracy while providing the information to the insurer, who is also responsible for being honest and transparent in his service to the insurer.

However, while it may be right to do so, many policyholders forget this principle and end up providing incorrect or incomplete information to their insurer. This, in most cases, leads to their claim being denied, be it for a life insurance policy, a health insurance plan or a motor insurance plan. This is just one of the many reasons why insurance claims get rejected. Here, we’ll shed some light on other reasons you may be denied your insurance claim.

Reasons for rejection of life insurance claim

Illegal Bought Policy – Many people buy life insurance Either in a hurry during tax season, or without any thought, outsourcing a job to an agent. In both these cases, chances are high that the policyholder is not fully aware of the policy coverage details and exclusions. As a result, when a claim is made without full knowledge of the coverage of the policy, there are high chances of the claim being rejected.

given wrong information The principle of good faith is a very important clause in a contract of insurance that requires the policyholder to disclose all information required for the offer. If there is even the slightest discrepancy in the information provided by the policyholder, the insurer shall have the right to reject any claim raised under the policy.

Business details – The applicant’s occupation is a major factor to be taken into account during the insurance underwriting process. Depending on the level of risk associated with one’s business, the insurer may charge premiums accordingly, or in some cases, may even deny cover altogether. If you have provided false or incorrect information about your profession, the insurer may reject your claim.

Non-disclosure of details of medical history – An applicant’s medical history details are important in the insurance underwriting process. If any discrepancy is found in those details after the commencement of policy coverage, any claim raised is likely to be rejected.

Death due to unknown causes Claims for death due to suicide, drug overdose, drunk driving, outside the geographical scope of the policy, war/war like situations, etc. will not be covered.

policy lapse – Be it a term plan, endowment plan, ULIP or any other type of life insurance, once the policy expires, it will stop providing this cover. So if you make a claim on a lapsed policy, it will not be registered or honored.

Withholding information about existing insurance policies – Often, policyholders fail to disclose information about their existing/old policies while applying for a new policy. This is enough reason for the insurer to reject your claim when the time comes.

Reasons why motor insurance claims get rejected

Your motor insurance claim can be rejected for a variety of reasons related to your vehicle, driving style, purpose for which the vehicle is being used, and many more.

Unfit to drive – You are involved in an accident and you have made a claim with your insurer. However, your insurer discovers that your vehicle’s tires were worn out, or that your tail-light was not working at the time of the accident, making the vehicle unfit to drive. This is sufficient reason for rejecting your claim.

Violation of ‘Limit of Use’ clause – motor insurance policies Vehicles are provided for personal and commercial use. Therefore, if you have taken an insurance policy for your personal vehicle, your policy will not cover any damages that may occur while the vehicle is being driven for business purposes.

Drunk or reckless driving – If the vehicle is involved in an accident driven by someone under the influence of intoxication, or is being driven negligently, the insurer makes sure to disclaim the claim arising out of such accident.

Driver without license – If the vehicle crashes while being driven by someone without a valid driving license, the insurer will reject the car or bike insurance Claims arising from now on.

Unpaid Premium – If you have made a claim on your auto insurance policy but some outstanding premiums are pending payment, the insurer may reject your claim.

Reasons for rejection of health insurance claims

Conditions for pre-existing diseases – Health insurance plans usually do not cover pre-existing diseases from the inception of the policy. There is usually a waiting period of 4 years or less, after which the insurer will cover the pre-existing diseases. Therefore, any claim relating to the declared pre-existing condition is not likely to be raised by the insurer.

Permanent Policy Exclusions – work medical insurance policy Getting them to work can be a bit more complicated, especially considering the exclusions. Make sure you know what diseases, treatments, expenses are covered under the policy, what is the waiting period for coverage, and which diseases are not specifically covered.

Limit/Limitations of Treatment – Health insurance policies often come with a cap on treatment cost and room rent. This means that the insurer will be liable to cover the treatment cost only up to a certain amount, while the rest will have to be borne by the policyholder.

Claim form filled incorrectly It is natural to be mentally stressed during a medical emergency. However, it is important to exercise caution while filling out your claim form, as any wrong details about the policy, or remedies, can cause the insurer to reject your claim outright.

Break in policy renewal – If you forgot to renew your health insurance policy but unfortunately have to make a claim after a medical emergency, the insurer will not consider your claim. In addition, failure to renew the policy on time may result in loss of No Claim Bonus.

The real purpose of having an insurance policy is to protect oneself or one’s family members from financial loss that may occur after some unfortunate event. If purchased and maintained with due diligence, an insurance policy is nothing short of a boon, especially during tough times.

(This content is not created by the editorial team.)

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