Insurance Claim Rejected? 5 Critical Mistakes Costing Policyholders Their Money!

Insurance

|

Updated on 13 Nov 2025, 08:56 am

Insurance companies process millions of claims annually, with most approved. However, rejections often stem from discrepancies between documentation and disclosures, missed deadlines, or policyholder misunderstandings.

The five most common reasons for claim denial are:

1. **Non-disclosure of Medical History**: Failing to declare even minor past medical conditions like thyroid issues, old fractures, or hypertension at the time of policy purchase can lead to claim rejection. Insurers can legally deny claims if undisclosed material information is discovered. 2. **Lapsed or Inactive Policies**: If a policy's premium is missed or its renewal date has passed before an incident occurs, coverage is nullified, leading to claim denial. Keeping policies active through renewal reminders or auto-debit is crucial. 3. **Claims Filed Outside Allowed Timeline**: Insurers have strict deadlines for reporting incidents. For health insurance, this is often within 24 hours of hospitalization, and for motor insurance, before repairs start. Late notification can lead to claim rejection. 4. **Policy Exclusions Misunderstood**: All policies have exclusions (e.g., dental in health plans, mechanical failure in motor plans, suicide in life plans). Not understanding these specific limitations can result in unexpected denials. 5. **Insufficient Documentation**: Missing essential documents like hospital bills, discharge summaries, FIRs for accidents, or proof of ownership can grounds for rejection. Clear, complete documentation is vital to establish the incident and loss.

**Impact** This news is highly relevant for all insurance policyholders in India, impacting their financial security and potentially causing significant stress and financial loss if claims are rejected. For insurance companies, frequent rejections can lead to customer dissatisfaction and regulatory scrutiny. The impact on policyholders' financial well-being and trust in the insurance sector is considerable. Rating: 6/10

**Definitions** * **Policyholder**: The person who owns an insurance policy. * **Claim**: A formal request made to an insurance company for payment based on the terms of the insurance policy. * **Non-disclosure**: The act of not revealing important information that an insurer needs to assess risk. * **Material Information**: Facts that are significant enough to influence an insurer's decision to offer coverage or set premiums. * **Lapsed Policy**: An insurance policy that has expired due to non-payment of premiums or failure to renew by the due date. * **Exclusions**: Specific conditions or events that are not covered by an insurance policy. * **FIR**: First Information Report, a report lodged with the police at the start of a criminal investigation.