Is your insurer not honoring your valid claim? Do you feel like you’ve been defrauded by your insurance company or your claim is not being settled as it should be? Then don’t despair. As an insurance advisor, I will share with you what to do if insurance claim is denied. I will lay down a roadmap for you to get your claim honored.
First we will try to achieve our goal with friendly and peaceful way. If it doesn’t work then we will seek help of all legal channels ranging from ombudsman to consumer forum to court.
You’re supposed to go step-by-step, not to skip any, to avoid unnecessary delays.
Let’s know how to deal with insurance claim denial.
Insurance is a legal agreement between the insured and the insurer and its foundation is based upon mutual trust which means that insurer is supposed to mention all terms and conditions including exclusions as clear as possible and policyholder needs to fill the proposal form with uberrima fides.
As per the contract, the insurance company is legally bound to honor insurance claim, if required.
In early days of insurance marketplace, many policyholders faced unreasonable claim denials which is why people’s trust started fading away. To win back the trust, many nations came up with a robust solution.
What they did they established dedicated authorities for example National Association of Insurance Commissioners (NAIC) (for USA), Prudential Regulation Authority (PRA) (for United Kingdom) or Insurance Regulatory and Development Authority (IRDAI) (for Bharat) whose sole purpose were to regulate and promote insurance marketplace and make sure no policyholder faces unreasonable insurance claim denial.
To prevent policy miss-selling and unfair claim rejections, these authorities have enacted several regulations for insurers and regularly check whether insurers are following the same.
Since then insurance marketplace around the globe is boomed. Now everyone who understands importance of insurance and is well educated always secures himself and his family against unforeseen events.
Nowadays, it is almost impossible for an insurer, due to stringent guidelines, to arbitrarily deny a claim request. And besides that, increasing competition also forces insurers to honor all valid claim requests.
But sometimes some insurers try to outwit with help of policy wordings. Therefore, whosoever faces an insurance claim refusal must first understand why the insurer is doing so. What policy clause they are citing?
Here are most common claim refusal reasons:
- Claim against exclusions: Damage/illness/cause of loss is not covered. Most of us who buy insurance via agent trust whatever our agent says. And for your information, most of the agents ensure prospects that their policy covers every risk. But it’s not true. Your policy covers only certain risks and comes with a number of exclusions. This is why, concerned watchdog authorities provide 14-30 days cooling-off period to all policyholders. During this period, policyholder can read and understand his policy wordings. And if he finds anything wrong or things that he became a victim of policy mis-selling, he is entitled to return his policy and get full refund of paid premium. At the time of selling policy, insurer doesn’t give importance to the facts (except important ones) provided by the prospect. But at the time of claim request, he doesn’t let any stone unturned. If fortunately he finds a loop hole, he doesn’t hesitate to refuse claim. It’s a bitter truth. Read 10 mistakes to avoid while buying a policy.
- Non-disclosure of facts: It’s often seen that majority of prospects do not fill proposal form themselves or don’t disclose facts truthfully which eventually leads them to claim refusal. In this case, insurer is at no fault.
- Policy lapsed: In today’s hustle and bustle, many policyholders forget to renew their policy despite receiving frequent reminder calls from insurers. After the policy expiration, insurance company gives up to 30 days as a grace period to revive policy. But if insured fails to do so, policy gets lapsed which eventually means insurer is no more liable to pay you claim.
- Nominee details are not updated or the same is not appointed: In case of life insurance claim, if insured had not updated his nominee details or not appointed the same then in this case, insurance company may deny claim.
- Disobeying rules and regulations: No policy covers a loss or pays an insurance claim if policyholders deliberately put themselves or insured property into danger, attempt suicide or participate in illegal activities.
- Not cooperating with investigation team: Once a claim request is raised, company conducts investigation to find out claim is genuine or forged. To ascertain the facts, investigation team needs policyholder’s cooperation.
Once a claim is rejected, the insured has to follow a few steps to get his claim honored for example first file a complaint with the insurance company and explain why your claim should be honored.
If the insurance company does not redress claim complaint, then the insured can approach insurance ombudsman and file a complaint.
If still you are not satisfied with the settlement, you can also go to court or consumer dispute redressal agencies.
Next let ‘s make a roadmap to force insurance company to pay your claim. If your claim is indeed genuine then believe me this is the way to bring your insurer to his knees.
You can file a complaint against the insurance company if:
- the insurer has inexplicably denied your insurance claim.
- the insurance company is not following the terms of the policy.
- you are dissatisfied with the settlement.
- wrong policy has been sold to you.
- the insurer is unnecessarily delaying claim settlement.
Before you jump in, ask yourself two questions (discussed below) to safe your and insurer’s precious time.
Why is your insurance claim rejected?
In the event of an insurance claim rejection by the insurance company, first thing you’re supposed to do is to try to find out why your claim has been rejected in the first place. Insurance company intimate you by letter, e-mail, SMS, or phone call, why it cannot pay you claim.
Look at the reason and then decide whether the insurance company has rejected your claim unnecessarily or for some reason.
If you believe that your insurance claim should have been paid, you can follow the steps below to force your company to pay your dues.
If you really believe that your claim is valid; according to your policy terms and conditions, then no one can stop you. In fact there are many authorities out there to help you get the same.
Does my insurance policy cover the cause?
First of all, you have to read your insurance policy and see whether the event you’re filling claim for is covered by your policy or not. The policy documents that are sent to you by post clearly state what your policy covers and what does not.
Once you are confident that your policy covers the cause, follow the roadmap discussed below.
What to do if insurance claim is denied?
Filing a complaint against an insurance company is very easy but you have to follow the process. For example, before going to other authorities, you have to lodge a complaint with the Grievance Redressal Officer of the company or else your complaint will not be entertained by other concerned authorities.
Below is the procedure to file a complaint against the insurance company:
- File a complaint with your insurer with a valid reason: You will first get your complaint registered in the Insurance Redressal Office set up by the insurance company and take a receipt (as a proof you’re following standard protocol). And wait for the reply.
- Approach Insurance Ombudsman: After that, if your complaint is not resolved or you’re not satisfied with the settlement then you will go to Insurance Ombudsman. He will act as an intermediary and try to settle the issue with mutual consent.
- File a lawsuit: If you are not satisfied with the settlement offered by Insurance Ombudsman, you can take your complaint to the court or consumer dispute redressal agencies.
1. Get a complaint lodged at your company’s insurance grievance redressal office
Due to the guidelines, every insurance company is bound to set up an insurance redressal office where customers can come and register their complaint. And that complaint should be resolved within 15 to 30 days.
Once all friendly efforts go in vain. It’s your time to take the command and show your insurer, he’s messing up with wrong person. Now it is your time to conduct investigation, understand all the facts, and collect evidences to support your claim.
After that, visit your insurance company’s office and file a written complaint. Clearly explain why the reason for rejecting your insurance claim is wrong and it is covered in your policy. If possible, highlight the cause by attaching a Xerox copy of the terms and conditions of the policy documents and attach all supporting documents.
Do not forget to take the receipt. The company is bound to give you acknowledgment receipt by hand or through e-mail.
While taking your receipt, ask in how many days your complaint will be resolved. You have to wait for the time given by the company before you approach other channels. Usually, insurance companies redress complaints within 7 to 15 days.
This is not necessary, but you can still go for it: File your insurance complaint with the Integrated Grievance Management System online. Note: Name may differ, depending upon the country you belong to, but certainly all have one.
If your insurance company is not resolving your complaint within the the time frame, then you can register your Insurance Claim Complaint on the website of online Integrated Grievance Management System(IGMS) to force insurer to resolve your complaint with highest priority.
Note: If insurer has already closed your complaint then it would be of no use to file a complaint on this website.
How to file an insurance complaint online? (Optional)
I am illustrating steps for Integrated Grievance Management System set up Insurance Regulatory and Development Authority of India, you will need to find out your country’s IGMS website (just in case you belong to other country).
- Go to https://igms.irda.gov.in/ and register yourself by entering the required details.
- After registration, file a complaint and register.
- You can also track the status of your complaint.
Note: Only complaints like delay in grievance redressal can be registered on this website. For other claim cases, insured can approach the judicial channels i.e. Ombudsman, Consumer Court or Civil Court.
If the company finds that it has accidentally rejected your insurance claim, then a good company settles the claim at once. If for some reason your second claim request is rejected, do not panic, you have other options.
If the complaint is not redressed by the insurance company, you can follow the second step.
2. Approach insurance ombudsman
For your information, the Insurance Ombudsman is a person appointed by the Government, it offers its services for free.
What is an Insurance Ombudsman?
With a vision of an efficient and cost-effective way to resolve issues related to insurance claims, many nations have introduced Insurance Ombudsman Scheme under the Insurance Act.
For example, in 1998, the Government of India launched the Insurance Ombudsman Scheme under the Insurance Act 1938 to resolve disputes related to insurance claims settlement. Similarly, The Financial Ombudsman Service in the United Kingdom was established in 2000.
An Insurance Ombudsman Agency protects the interests of insurance holders. Policyholders can go for redressal of complaints related to insurance. Insurance Ombudsman acts as an intermediary between the policyholder and insurer. Once a complaint is received, ombudsman settles the claim; after hearing both sides.
Before filing a complaint against the insurance company with the Insurance Ombudsman, insured has to lodge a complaint with his insurer, as mentioned in the first step. If the company does not redress the complaint or does not respond to the complaint within 30 days or is taking time in insurance claim settlement, the policy holder can file a complaint with the Insurance Ombudsman.
The biggest advantage of going to the Insurance Ombudsman is that if the policyholder is not satisfied with the claim settlement, he can go to court or consumer forum, but the insurance company has no choice than honoring the settlement decided by the Insurance Ombudsman.
At present, there are 17 Insurance Ombudsmen all over India and you can lodge your insurance complaint with any of them. The Insurance Ombudsman does not charge any fee to file a complaint and you do not need a lawyer or expert for this.
Once a complaint is received, ombudsman entertains the complaint within 15 days and the complaint is resolved within 3 months.
Claim disputes for up to 2 millions in value can be heard under the Insurance Ombudsman Scheme.
As mentioned above, if you are again dissatisfied with the policy settlement, you can go to court and file a case against the insurance company.
Note: If your insurance claim is valid then merely approaching Insurance Ombudsman will be enough.
To see the list of Insurance Ombudsman, visit IRDAI website (in case you belong to India) or find out your country’s concerned watchdog authority’s website.
- It is mandatory to contact the grievance redressal officer appointed by insurer before filing a complaint with the Ombudsman.
- If your complaint is in a consumer court or any court of law, then wait for the decision before going to the Insurance Ombudsman.
- You do not need a lawyer to file a complaint with the Insurance Ombudsman.
- If the Ombudsman thinks that your claim is not valid, then he can reject your complaint.
- A complaint cannot be filed after one year from the date of claim review.
- Ombudsman has to redress the complaint within 3 months of receiving the complaint.
- If he fails to reach on a mutual agreement, he can give the required award. The decision to accept or reject the award is up to the policyholder but the insurance company is bound to comply with the decision.
- If the policyholder accepts the award given by the ombudsman then he has to give written information to the ombudsman.
Procedure for lodging complaint with Ombudsman:
- The address of the nearest ombudsman can be obtained from the official website of your country’s insurance regulatory body or you can visit the branch/website of the insurer to obtain the same. Also, your policy documents may have the details.
- Submit written complaint to the respective Ombudsman along with the documents supporting your complaint. Complaint can also be sent by post.
If you are unable to present your case, then there are some private companies that can do that on you behalf and get a settlement. In return, you have to pay them some fee.
Also keep in mind that if your insurance claim is accepted, insurance company does not give compensation for the fees paid to the private company (who presented your case).
3. File a complaint against insurance company
Most policyholders get satisfactory claim settlement after approaching the Insurance Ombudsman. But even if you are not satisfied with the decision made by the Ombudsman then you have the last option to file a complaint against insurance company in the court.
You can lodge your complaint with the consumer dispute redressal agency which will help you to get insurance claim.
You can file a complaint in consumer forum. Where your insurance complaint will be resolved as soon as possible.
Or you can register your case in the district court with the help of a lawyer (it may take years). The court decides on the basis of the facts whether the insurance claim should be paid to the policy holder or not.
Dispute redressal agencies have been set up at the district level, state level and national level and complaints can be lodged in these agencies according to the amount of sum insured.
First, find out to which consumer dispute redressal agency your complaint belongs to. As mentioned before, there are 3 types of grievance redressal agencies at the district, state and national level (District Forum, State Commission and National Commission).
In case of India, if the amount of insurance claim is less than 2 millions, the complainant will have to go to the district forum.
Similarly, if the amount is more than 20 Lakhs and less than one crore, then the complaint has to be lodged with the State Commission.
If the amount of the claim is more than 10 millions, then a complaint has to be lodged with the National Commission .
- If your complaint is lodged with Insurance Ombudsman, then wait for the verdict before going to consumer or other court.
- If insurance claim amount is 20 Lakh or less, then a case can be registered in the District Consumer Disputes Redressal Forum.
- The State Consumer Disputes Redressal Forum can hear cases of more than 20 Lakh and less than 1 crore.
- The National Consumer Disputes Redressal Forum can deal with cases where the compensation value is more than 1 crore.
Write your complaint outlining all the facts and clearly state what compensation or relief you are seeking.
Submit your insurance complaint to the respective Consumer Forum (read the important points above).
If you want to register your complaint in another court such as district court, then you will have to take help of an attorney. But you will not need an attorney to do this in consumer court.
If your insurance claim is denied then above roadmap could help you get your claim honored. I understand the path is very difficult and time consuming. But if you’re right then this the way.
Peruse this bit of sage advise would help you. I humbly request you if you already know that your claim is invalid then don’t waste your and others precious time.
Frequently Asked Questions
How do you write a complaint letter to an insurance company?
- Download complaint form from your insurance company’s official website or obtain the same from nearest office of the company. Note: you can also write your complaint on a plane paper.
- Mention policy number, date of purchase and the like details.
- In ‘Subject’ section, mention what compensation or settlement you seek.
- In description section, mention all the details and explain why your claim should be honored. Tip: Don’t criticize, just explain your matter.
- Attach Xerox copies of supporting documents (if have) and also attach copy of the policy wordings that describe cause of loss/illness/injury is covered.
- Most importantly, after submitting the complaint, collect a written receipt for future references.
You can download complaint form from official website of your insurer or you can write the complaint on a plain paper. State all the facts along with proofs, highlight the terms and conditions from your policy documents that support your claim, and clearly mention why your claim should be paid.