As per official records, around 52 crore Indians were covered by health insurance in the fiscal year 2022, highlighting the increasing significance of insurance in the lives of the country’s populace. In today’s uncertain and unpredictable world, insurance is widely perceived as indispensable. However, the reality of insurance companies rejecting claims adds another layer of complexity. It functions as a formal agreement between the insured individual and the insurance company, wherein the insurer pledges to compensate the insured for any losses suffered in the event of the specified contingency occurring. The occurrence triggering the loss is termed the contingency or eventuality. In exchange for this commitment, the insured, or policyholder, pays a premium. An official plea seeking reimbursement of the amount, based on the provisions and guidelines of the insurance policy, directed to the insurer (insurance company) is referred to as an insurance claim. The insurance policy itself includes clauses delineating the circumstances under which a claim may be filed for payment or reimbursement. Put simply, a claim can only be made for an injury resulting from one of the specific risks outlined in the policy. Should the insured encounter difficulties in obtaining their insurance claim from the insurer, they have various legal options at their disposal

General process for filling a complaint-

Claiming insurance can be an intricate and somewhat dubious procedure as well. There is no one-size-fits-all upshot, and how your insurance claim is dealt with rests on the fine print in your policy. The general procedure for filing the claim is as follows:

  • Raise a Claim at the earliest or with such extended time as is permissible with the policy.
  • The Insurance Company must be notified of such damage as covered within the insurance policy.
  • On receipt of such conveyance, an insurer shall revert immediately and provide a comprehensible demonstration of the procedural provisions of their policy that you should follow. In the affairs, where the surveyor has to be appointed for evaluating the destruction/claim, it shall be accomplished within 72 hours of the receipt of intimation.
  • The appointed surveyor shall evaluate your claim where you shall be required to furnish all the particulars required by the surveyor. Non-furnishing of particulars or non-cooperation of any kind may cause delay in the assessment of the claim.
  • Claims Adjudication Report or Survey Report would be prepared based on the assessment submitted by the surveyor.
  • On the receipt of a Survey Report prepared by the surveyor, the insurer shall within the period of 30 days make an offer for settlement of claim. If the insurance company for any reason rejects a claim under the policy, it shall do within 30 days from the receipt of the survey report.
  • Once such offer for settlement of claim is accepted, the payment of the due amount shall be made within 7 days from the date of acceptance of the offer. In case of delay, the insurer is liable to pay interest at a rate that is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.

Legal Remedies Available if an Insurer Denies or Rebuts your Claim-

When the above general process doesn’t work out and the claim raised by you is rejected or such offer for settlement made by the insurer is not accepted by you, then you may opt for further legal remedies in order to seek what’s rightfully yours, however, it is important to choose the correct forum, best suited to your needs, in order to make an insurance claim. All the legal remedies have been discussed in detail below:

  1. IRDA: Trouble-Free Route to Lodge a Complaint: The Insurance Regulatory and Development Authority (IRDA) is the primary regulatory body overseeing the insurance sector in India, established under the IRDA Act. Its mission is to safeguard and promote the interests of policyholders by ensuring timely resolution of insurance claims and preventing fraud and misconduct by insurance companies. Among its duties is the handling and resolution of insurance-related disputes between various stakeholders. IRDA has introduced the Integrated Grievance Management System (IGMS) to facilitate online complaints against insurance providers. In India, an insurance advocate can lodge a complaint on behalf of the policyholder through this system, receiving a unique complaint ID for dispute resolution. This process primarily serves as a directive to insurance providers to settle claims within 15 days.
  2. Civil Courts:  The hierarchical structure of civil courts in India consists of approximately 600 district courts, 25 high courts, and the Supreme Court of India, which serves as the apex court. Among the 25 high courts, those in Delhi, Mumbai, Chennai, and Kolkata possess original jurisdiction to adjudicate matters above a specified monetary threshold. As a result, civil courts and their judges under these high courts do not handle cases exceeding this threshold. However, in all other instances, district courts and the competent courts of the first instance possess unlimited pecuniary jurisdiction to adjudicate any insurance dispute. Typically, civil courts take approximately two to three years to resolve such disputes
  3. Commercial Courts: Commercial Courts were established under the Commercial Courts Act, 2015, with an aim to ensure speedy disposal of high stake commercial matters. The Act had limited the specific value of the suit to not less than Rupees Three Lakhs. Wherein, the commercial courts were established at all the District levels, however, there were no commercial courts established at the District level where the High court had original civil jurisdiction such as Delhi, Mumbai, Madras, Kolkata, and Himachal Pradesh. Under Section 2(c) of the Commercial Courts Act, 2015, a claim for “Insurance and Re-insurance” has been recognized as “Commercial Dispute”.
  4. Consumer Courts: The consumer courts follow a three-tier hierarchy. In ascending order, these are the District Consumer Disputes Redressal Commissions (DCDRC), the State Consumer Disputes Redressal Commissions (SCDRC), and the National Consumer Disputes Redressal Commission (NCDRC). The insured according to the Consumer Protection Act is contemplated as a “consumer”. According to the new Consumer Protection Act, 2019, all the above commissions have their pecuniary jurisdiction above which they cannot hear complaints. Consumer complaints can be filed with respect to the claim value enumerated as below:
    • DCDRC – up to 1 crore; SCDRC – 1 crore to 10 crores; and NCDRC – more than 10 crores. The award pronounced by the NCDRC can be challenged before the Supreme Court.
  5. Insurance Ombudsman: As an alternative dispute resolution mechanism, policyholders can approach the Insurance Ombudsman for disputes involving amounts up to Rs 20 lakhs. The Insurance Ombudsman, although not a legal entity, lacks the authority to enforce its rulings against policyholders. Within three months of receiving the complaint, the Ombudsman is expected to issue a decision. If the policyholder is dissatisfied with the Ombudsman’s decision, they have the right to pursue legal action against the insurance company. However, the decisions made by the Insurance Ombudsman are binding on the insurers.

Limitation Period for Filing an Insurance Claim

The method for assessing the limitation period for insurance claims is outlined in Article 44(b) of the Limitation Act 1963. It states that the time starts from the date of the event causing the loss, or if the claim under the policy is partially or wholly denied, from the date of such denial. The prescribed limitation period for initiating a case in civil court or mediation is three years, whereas for filing a case in the consumer court, it is two years.

By- Esha (Intern)

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