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Here's why your insurance claim may get rejected

Insurance companies have many ‘exclusions’ and ‘exceptions’ under which insurers are not liable to pay claims

NEW DELHI: A communication between a general insurance company and the nominee of a person who had bought a policy from the former has become viral on social media. The letter communicates the reason for rejection of accidental death claim. In the letter, the insurer has expressed its regret for declining the claim as the insured was riding a 346 CC bike and as per policy terms, the claim is not payable for any bodily injury sustained for riding a bike over 150 CC.

The claim rejection letter, more so the reason cited for it, could have come as a shock for the grief-stricken family which has lost one of its members to an unfortunate accident. The family might now have to go knocking at the Insurance Ombudsman or consumer court to battle it out with the insurer, if they have the patience and resources to do so.

Jitendra Solanki, a Delhi-based SEBI-registered investment advisor, says he is not sure if this is a standard clause (rejection based on engine capacity of the bike), but this shows how minutely one needs to read the policy documents.

To ensure such a fate does not befall on you or your family members, it would be wise to be more vigilant while buying an insurance policy—life or non-life. Insurance companies have many ‘exclusions’ and ‘exceptions’ or situations under which insurers are not liable to pay claims. Often, these exclusions are not well highlighted by insurance companies as much as they highlight the benefits of the plans. But knowing these exclusions or fine prints may save your family from many hassles in the future.

Here are some little-known reasons for which your non-life insurance policy claims might get rejected:

Motor Insurance

Driving under inebriated condition: If the insurer can establish that the accidental damage to the car or bike was caused due to drunken driving.

Use of a private car for commercial purpose: If your private car gets damaged while being used for commercial purpose as private and commercial vehicles are covered by insurers under different set of rules

Vehicle not driven by the insured: At the time of accident, if the vehicle was not driven by the insured himself/herself, even if he/she was in the vehicle.

Driver’s license has expired: At the time of damage caused to the vehicle or injury caused to the driver, if the driving license had expired.

Overloading of the vehicle:  If your car had more passengers than it is capable of carrying or you were triple riding your bike at the time of an accident.

Not informing about changes made in the car/vehicle: Often people get additional electronic/electrical and or CNG kits fitted in the car. You should inform the insurer about the changes made in the car, else any claims in future may get rejected.

Home Insurance

Day to day wear and tear: Insurer will not pay for the losses incurred to your house due to daily wear and tear, and damages that need repairing or replacement. 

Lack of proof of damage: The insurer needs proof beyond doubt that there indeed have been damages to the house. You must be able to provide them documentary and photographic proof of the damages for hassle-free claims.

Health Insurance

Pre-existing diseases: All health insurance companies have a largely standard policy in terms of not covering certain pre-existing diseases such as high blood pressures, diabetes, thyroid, etc. immediately. Most insurers start covering them only after a waiting period that could be 2-4 years.

Exclusions: Like in most other insurances, health insurance also does not cover certain diseases or conditions like OPD and maternity expenses, dental cure, cosmetic treatments, injury incurred due to attempted suicide, etc.

So, in the future if you want to avoid any hassles while getting insurance claim settled, make sure you look beyond the benefits of an insurance policy highlighted by the insurer and read the fine prints.

Look beyond what's highlighted

Almost 15% of motor and health insurance claims get rejected on an average by insurance companies

Do not get carried away by the big claims of insurers, and do read the fine prints and list of exclusions

Maintain all the relevant documents and proof of damages or medical conditions handy in order not to get your claims rejected

Be honest with your disclosures while buying an insurance policy, hiding facts may prove to be a big hurdle at the time of claim settlement

In case of private insurers, claim rejections in case of motor and health insurance is close to 25%.


Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.


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