Insurance claims: Here’s a look at common reasons for rejection

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Over the weekend a claim rejection letter from HDFC Ergo went viral on social media citing that injury sustained while riding a motorcycle above 150 cc engine is excluded from the coverage under a personal accident policy. The letter stated “We would like to draw your attention. Your claim has been declined due to the below-mentioned reason which is the basis for disallowing the claim, an extract of which is mentioned below for your ready reference. As per the submitted documents, the insured was dead on 19/04/2020 due to head injury. Insured was riding 346 cc bike and as per policy terms and conditions claim is not payable under general exclusion clause 8, for bodily injury sustained while or as a result of driving motorcycle or motor scooter above 150 cc.”

While the rejection of claims has not been something new but the latest reason has made people question again their insurance policies. The mistrust between the insurer and the insured grows wider when such incidents of claim rejection are brought to light.

Here are some of the common reasons for claim rejection:

Definitions: One of the common reasons for claim rejection is the different interpretations of the same term by the insurer and the insured. For example, your home insurance policy may cover the house in case of any damage due to floods. But the seepage of water from the roof might not be covered in case of excessive rainfall. Similarly, burglary is defined as “an act involving the unauthorised entry to or exit from your home or attempt threat by unexpected, forcible, visible and violent means, with the intent to commit an act of theft.” Going by the definition the theft done by domestic staff might not be covered under the policy. Hence, it is important to understand the policy wordings before going for the plan otherwise there are high chances of your claim getting rejected.

Pre-existing Illness: It often happens that insurance claims get rejected on the premise of pre-existing illnesses such as hypertension. While many people remain unaware of these diseases the insurance companies deny the claim stating that the insured did not declare them at the time of buying the policy. Hence, it is always advisable to clearly fill in details in the proposal form at the time of buying the policy.

Flight delay or cancellations: Travel insurance offers cover for flight delay or cancellation. But again there are many if and buts. For example, the insurer will pay for trip delays caused due to airlines cancelling or rescheduling due to some natural disaster. However, if you miss the flight due to your own mistake then the policy does not cover it. Hence, it is advisable to learn about such terms and conditions beforehand.

Delay in filing a claim: One should file a claim as soon as possible after the event. This is because insurers generally give a time period of 7-30 days for filing the case, depending on the type of the policy and the type of insurance. One should therefore file the claim as soon as possible in order to avoid the unnecessary hassle of claim rejection.

Hence, given the hidden terms and conditions always be careful while buying an insurance policy.