Top Reasons Why Claims Get Rejected—and How to Avoid Them

Introduction

You've been paying premiums diligently, but when you file a claim, it gets rejected. Frustrating, right? Let's explore the common reasons for claim rejections and how you can avoid them to ensure a smooth claims experience when you need it most.

According to industry data, approximately 15-20% of insurance claims get rejected in India. While some rejections are legitimate, many could have been avoided with proper understanding and documentation. Knowledge is power when it comes to insurance claims.

Top Reasons Claims Get Rejected

Let's examine the most common reasons insurers reject claims across different types of insurance:

1. Non-Disclosure or Misrepresentation of Facts

This is the #1 reason for claim rejections. When applying for insurance, you must disclose all material facts honestly.

Common examples:

• Not disclosing pre-existing diseases in health insurance
• Hiding smoking habits in life insurance
• Not mentioning previous claims in motor insurance
• Concealing modifications to your vehicle

2. Claims During Waiting Period

Most insurance policies have waiting periods for specific conditions or services:

• Initial waiting period: 30 days for health insurance (except accidents)
• Pre-existing disease waiting period: 2-4 years
• Specific disease waiting period: 1-2 years for certain illnesses

Filing claims during these waiting periods will result in automatic rejection.

3. Policy Lapse Due to Non-Payment of Premium

If your policy has lapsed because you didn't pay the premium within the grace period (usually 15-30 days), any claim during the lapse period will be rejected.

Pro tip: Set up automatic premium payment to avoid accidental lapses.

4. Lack of Proper Documentation

Incomplete or inadequate documentation is a major cause of claim delays and rejections:

• Missing medical reports or bills
• Lack of FIR in case of theft or accident
• Unsigned or incomplete claim forms
• Missing prescriptions or treatment records
• No proof of ownership for damaged items

5. Treatment from Non-Network Hospitals (Cashless Claims)

If you opt for cashless treatment from a non-network hospital without prior approval from the insurer, your cashless claim will be rejected. You may still file for reimbursement, but it's not guaranteed.

6. Treatment Not Covered Under Policy

Many treatments and conditions are explicitly excluded from insurance policies:

• Cosmetic procedures (unless medically necessary)
• Alternative treatments (Ayurveda, homeopathy) unless specifically covered
• Dental treatments (unless accidental)
• Maternity expenses (if not covered in your plan)
• Self-inflicted injuries

7. Delay in Intimation

Most policies require you to intimate the insurer about a claim within a specific timeframe:

• Health insurance: 24-48 hours for planned hospitalization
• Motor insurance: Immediately or within 24 hours of accident
• Life insurance: As soon as reasonably possible

Significant delays without valid reasons can lead to rejection.

8. Driving Under Influence or Without Valid License

For motor insurance, claims are automatically rejected if:

• The driver was under influence of alcohol or drugs
• The driver didn't have a valid license
• The driver's license was not appropriate for the vehicle type

9. Acts of Fraud or Criminal Activity

Any claim arising from fraudulent activities or criminal acts will be rejected:

• Deliberately causing an accident
• Inflating claim amounts
• Submitting fake bills or documents
• Claiming for non-existent injuries or damages

How to Prevent Claim Rejections

Follow these best practices to ensure your claims are processed smoothly:

1. Be Honest and Complete in Your Proposal Form

Disclose all material facts, even if you think they might increase your premium. It's better to pay a higher premium than face claim rejection when you need it most.

2. Read Your Policy Document Carefully

Don't just rely on the agent's explanation. Read the policy wordings, especially:

• Exclusions
• Waiting periods
• Claim procedures
• Documentation requirements
• Definition of terms

3. Maintain All Records

Keep a file with all insurance-related documents:

• Policy documents
• Premium payment receipts
• Medical records and reports
• Vehicle registration and fitness certificates
• Previous claim documents

4. Intimate Promptly

Don't delay informing your insurer about a claim. Most insurers have 24/7 helplines. Call immediately after an incident.

5. Get Pre-Authorization for Planned Treatments

For elective surgeries or planned hospitalizations, always get pre-authorization from your insurer. This significantly reduces the chances of claim rejection.

6. Keep Emergency Contact Numbers Handy

Save your insurer's claim intimation number, customer service, and cashless helpline numbers in your phone.

7. Preserve Evidence

In case of accidents or theft:

• Take photographs of damage
• File an FIR immediately
• Don't repair vehicle before insurer's surveyor inspection
• Keep all original bills and receipts

8. Follow Up Regularly

Don't just submit documents and forget. Follow up on your claim status regularly. Most insurers provide online tracking facilities.

What to Do If Your Claim Is Rejected

Don't panic if your claim gets rejected. You have options:

1. Understand the Reason

Get a detailed written explanation for the rejection. Insurers are required to provide specific reasons.

2. Review Your Policy

Check if the rejection reason is valid according to your policy terms. Sometimes rejections are based on incorrect interpretation.

3. Gather Additional Evidence

If the rejection is due to insufficient documentation, provide additional evidence to support your claim.

4. Request for Reconsideration

Write to the insurer's grievance redressal officer with all supporting documents and request reconsideration.

5. Escalate to Insurance Ombudsman

If the insurer doesn't respond within 30 days or you're dissatisfied with their response, you can file a complaint with the Insurance Ombudsman. This is a free service, and the Ombudsman's decision is binding on the insurer for claims up to ₹30 lakh.

6. Approach IRDAI

You can file a complaint with the Insurance Regulatory and Development Authority of India (IRDAI) through their IGMS portal.

7. Legal Action

As a last resort, you can approach consumer forums or courts for resolution.

Understanding why claims get rejected is the first step in ensuring your claim gets approved when you need it. Most rejections can be avoided through honest disclosure, thorough documentation, and timely intimation. Always read your policy documents, understand the terms and conditions, and maintain proper records. Remember, insurance is meant to provide financial protection—don't let avoidable mistakes deny you this protection when you need it most.

If you're ever unsure about any aspect of your policy or the claims process, don't hesitate to ask your insurer for clarification. It's better to ask questions before filing a claim than to face rejection later.