Insurance being a contract between the insurer and policyholder, it is mandatory to diligently read the documents properly before signing
Insurance is basically a contract between the insurer and policyholder based on principles of good faith. If the policyholder fails to exercise complete honesty and accuracy while providing the information to the insurer, the insurer might reject the claim stating it as the reason for its rejection.
You need to be aware of the following reasons for rejection before you file claim papers. Below listed are some of the common reasons for claim rejection:
Non-disclosure or incorrect disclosure of the facts
Giving inappropriate or wrong information about policyholder is one of the most common reasons for claim rejection. If there is any wrong information or discrepancy in the information provided to the insurer, then the insurer has the full authority to reject the claim raised under the policy by the policyholder.
As a responsible buyer, it is obligatory for the policyholder to give the right information required by the insurer. There can be a possibility that the insurer may add the wrong detail by mistake, so it is advisable to check the policy documents precisely as soon as you receive it and inform the insurer in case of any mismatch.
There are certain conditions stated by the insurer under which a claim is rejected. For eg: In case of motor insurance, if the vehicle is involved in an accident due to the intake of intoxicants or has recklessly driven the vehicle, the insurer is sure to reject the claim arising due to such an accident.
Lapse in policy
If the premiums are not paid on due dates, the policy will lapse. Insurers also provide a grace period for the policyholders who fail to pay the premiums as per the due dates. However, those policyholders who fail to pay the premiums within this grace period will stand lapsed and will cease to provide cover. Claim raised on a lapsed policy will not be registered or honoured.
Holding back information about the existing policy
Policyholders often fail to provide information about the existing policy when they apply for a fresh policy. This could be one of the reasons for rejection of the claim.
Not appointing or updating the nominee details
The appointment or updating of the nominee details are mandatory. Suppose, if the details do not get updated in case of death of the nominee or after the marriage of the policyholder and a claim is raised there is a high probability of the rejection of claim in this case as the nominee/nominees may not be available anymore and the company cannot figure out whom to pay the fund.
What are the simple steps policyholders should follow to avoid claim rejection at the time of buying insurance?
Getting the claims honoured by insurers can be a steep uphill climb. There are many clauses, exceptions and conditions that the policyholder is expected to meet. If the policyholder fails to meet any of these conditions, the claim might be rejected and the amount won’t be disbursed to the concerned person.
Sometimes rejection of claim could be due to wrong information or details entered by the insurer. But in maximum cases, it is the fault of the customers.
Below mentioned are steps that policyholders should follow to avoid rejection at the time of buying insurance:
-Disclosure of correct and accurate information to the insurer can help you get the sum amount without holding anything against you. Any kind or pre-existing diseases or smoking/drinking habits or any other conditions found later would restrict you from getting the sum amount during settlement.
-It is prudent that the policyholder should update or appoint the nominee details immediately in case of any material change. The insurer must be informed if the case of death of the insurer or if the policyholder gets married. This can help in avoiding to be the reason for claim rejection.
-As it is said, “A stitch in time saves nine”. Similarly, filing insurance claims on time comes with its own perks. It is important to keep the insurer posted about the events for which the policyholder might need a financial helping hand from them.
-Scrutinise the documents precisely beforehand in order to avoid unexpected surprises in the future. Insurance being a contract between the insurer and policyholder, it is mandatory to diligently read the documents properly before signing. In addition to this, it is very important to read and dissect the exceptions and exclusions properly to ensure that none of the clauses mentioned therein is a possibility.The writer is Director of Probus Insurance Broker Ltd.