Insurance claim rejected? Insurer, Ombudsman and Consumer Commission

First, find out exactly why

Ask for the rejection, or the calculation for a short payment, in writing. Then collect the policy schedule and wording, the proposal form, the claim form, hospital or repair bills, and every letter and email. Check the stated reason against the actual policy wording, not the brochure.

Common reasons for rejection, and what to check

• Non-disclosure of an earlier illness. Was the condition actually asked about, and did it have anything to do with the claim? For health insurance, once a policy has run continuously for 60 months, IRDAI’s Master Circular on health insurance (May 2024) does not allow it to be contested for non-disclosure or misrepresentation, except for established fraud. For life insurance, Section 45 of the Insurance Act, 1938 bars any challenge to a policy on any ground after three years.
• Waiting periods and exclusions. Check whether the waiting period has actually run, counting earlier years of continuous cover, including any portability from another insurer.
• Late intimation. In a vehicle theft case where the FIR was lodged promptly, the Supreme Court held in 2020 that delay in informing the insurer is not by itself a ground to reject a genuine claim.
• “Hospitalisation not needed” or proportionate deductions. Ask for the medical basis and the policy clause relied on.
• Cashless refused. A refusal of cashless treatment is not a rejection of the claim. You can still claim reimbursement.

Step 1: The insurer’s grievance officer

Write to the insurer’s grievance redressal officer, giving the policy and claim numbers and explaining why the rejection is wrong. Keep the complaint number. You can also register the complaint on IRDAI’s Bima Bharosa portal, which tracks complaints against insurers.

Step 2: The Insurance Ombudsman

• For complaints where the amount claimed, including expenses, is up to ₹50 lakh
• After the insurer rejects your complaint, or one month after you complained with no reply
• Within one year of the insurer’s reply, or of the end of that one month
• No fee, and no lawyer needed
• The award is binding on the insurer. If you are not satisfied, you can still go to the Consumer Commission or a court.
• The matter must not already be pending before a court, the Consumer Commission or an arbitrator.

The Insurance Ombudsman at Chennai covers Tamil Nadu, including Coimbatore: Fatima Akhtar Court, 4th Floor, 453, Anna Salai, Teynampet, Chennai 600 018; phone 044 2433 3668. Complaints can be filed online at cioins.co.in.

Step 3: The Consumer Commission

An unfair rejection is a deficiency in service under the Consumer Protection Act, 2019. A consumer complaint can be filed within two years. It suits claims above the Ombudsman’s ₹50 lakh limit, or cases where you want compensation and costs on top of the claim amount. The Commission is decided by the amount paid for the service, which for insurance is generally taken to be the premium, so most insurance complaints are heard by the District Commission. See fees, time limits and appeals.

Which route to choose

The Ombudsman is free, informal and usually quicker, but limited to claims up to ₹50 lakh. The Consumer Commission usually takes longer, but has no such limit, can award compensation and costs, and its orders can be appealed and enforced. Choose one route for the same dispute at a time.

Common questions