People take health insurance with the belief that the insurance company will bear the cost of treatment if needed, but many times after the treatment is completed, the insurance company rejects the claim for one reason or the other. In such cases, if the insurance company does not have a solid legal basis, it may have to pay a heavy price. One such case came to light recently, Maharashtra State Consumer Disputes Redressal Commission, in an important decision, ordered a compensation of Rs 20 lakh to a private insurance company. The case is related to the treatment of blood cancer of a doctor’s son, in which the family spent about Rs 33.58 lakh on the treatment. Despite this, the insurance company rejected the claim citing lack of information about temporary speech delay that occurred in the child’s childhood and also canceled the policy. The Commission said that speech delay was neither a serious disease nor was it related to cancer, hence rejecting the claim on this basis was arbitrary and illegal. Let us try to understand from this case what are the important rules related to health policy. When can companies reject your claim? What rights do you have if your claim is rejected?
When can the insurance company reject the claim?
insurance The contract is based on the principle of utmost good faith. That is, while taking the policy, the customer has to provide all the necessary information correctly. If you have hidden any important information, then the company may reject the claim at the time of need. For example, if information about a pre-existing serious disease is concealed and the same disease is later treated, the company may reject the claim. Similarly, if a claim is made for a disease or treatment which is excluded in the terms and conditions of the policy, the waiting period is not completed, there are cases of fake documents, wrong bills or fraud, or the policy has lapsed or the premium has not been deposited on time, then the insurance company can also refuse to pay the claim.
When will it be considered wrong to reject a claim?
Recent decisions of the Consumer Commission and courts have made it clear that the insurance company cannot reject the claim merely on the basis of technical reasons or guesswork.
- There should be no connection between the disease and the hidden information.
- The company made allegations but could not prove them.
- The company itself must have conducted a medical checkup before issuing the policy.
- The company may have been renewing the policy for a long time and later rejected the claim on the same grounds.
- Claim may have been stopped due to wrong interpretation of policy terms.
In such cases, the Consumer Commission can order the company to pay compensation along with the claim. In many recent decisions, it has been said that rejecting a claim merely on the basis of doubt or technical objection will be considered as deficiency in service.
Why is Material Fact most important?
In insurance disputes, most of the disputes are related to material facts i.e. important information. Suppose a person hides a pre-existing heart disease and later gets the same disease treated, then the company can reject the claim. But if a person did not give information about mild asthma and later got cancer treatment, then it would not be considered right to reject the cancer claim just on the basis of hiding asthma. Unless the company proves that the information affected the insurance risk. The Consumer Commission has adopted this principle in many recent decisions.
What to do if the claim is rejected?
If the insurance company rejects your claim, there is no need to panic. First of all, ask for a written reason from the company for rejecting the claim. After this, file a complaint with the Grievance Redressal Officer of the company. If a solution is not found there too, a complaint can be made to the insurance regulator IRDAI. Even after this, if the dispute persists, an appeal can be made to the Insurance Ombudsman. If justice is still not provided, legal relief can be sought by filing a case in the District, State or National Consumer Commission.
Keep these things in mind while buying a policy
While taking health insurance, never hide your medical history and keep all the important documents and test reports safe. Before purchasing the policy, read its terms and conditions, especially the exclusions (on which diseases or conditions the claim will not be given) and the waiting period (after how much time the claim will be given). During treatment, keep the hospital bills, discharge summary and doctor’s slips safely and if needed, file a claim without any delay.
It is clear from the recent decision of the Consumer Commission that insurance companies cannot reject claims just by citing weak or technical reasons. If the policy holder has given correct information and has followed all the terms and conditions of the policy, then the company will have to pay the claim. If the company rejects the claim without any valid reason, it may have to pay additional compensation for mental stress and deficiency in service along with the claim amount.
Also read- Is health insurance of Rs 10 lakh enough for treatment? This is how mathematics has changed
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