Many of us purchase insurance with the expectation that claims will be paid out and feel really bad whenever this does not take place in the manner we expected. In an ideal scenario, insurance companies would neatly delineate all the terms and conditions of policies in a language that is easy to understand and customers would take some time out to read and understand the same prior to purchasing their insurance policies. Rejection of claims is quite high in India and public information on this matter is quite limited. Claims pertaining to health insurance are usually rejected since hospitalization took place on account of a pre-existing ailment that was not disclosed previously.
The sheer fact that an ailment existed earlier can be ascertained through case histories of doctors. Whenever insurance companies suspect the same, they seek out surgical documents and other information from the hospital in question. Most of the time, this ends up revealing the truth since the entire case history and medical details of the patient are accurately available with hospitals. Most people hide diseases such as diabetes, hypertension, neurological ailments like epilepsy and internal cysts. Whenever a claim is rejected, patients often get furious but in many cases, the hiding of pre-existing diseases was something done deliberately. However, many insurance companies would also classify almost everything they can as pre-existing. There are scenarios where simple comments by the doctor or a differential diagnosis like blood sugar has led to claims being turned down.
In many situations, the prime hospitalization cause remains highly subjective. For instance, pre-existing piles or the newly diagnosed ulcer may both have been reasons behind a sharp fluctuation in haemoglobin levels. Once the insurance company takes its own decision regarding this, it is hard to get claims approved. Global travel and life insurance claims are also turned down due to non-disclosure of any pre-existing medical ailments. In case of vehicle insurance, many claims are rejected on account of negligence on part of the driver. Companies ferret out signs of the same through medico-legal or police reports. The accident description has to be consistent to the surveyor, investigators, insurer and all other parties. There are other reasons for rejection, namely that the vehicle has personal insurance but is used commercially.
Rejection of home insurance claims usually takes place due to particular exclusions like wear and tear, short circuits and seepage among other reasons. Fires which take place due to short circuits and wall damage on account of seepage are common reasons for rejection of insurance claims. Another aspect is that sometimes things like basements which are material risks for insurance companies, are not properly revealed by customers or even facts like a property that is lying unoccupied. Aspects like commercial activity like tenants/offices/paying guests are also not mentioned in many cases. Another issue is often observed when a facility management company for a residential complex purchases home insurance instead of the owners or a tenant purchases building insurance. What this means is that often the one buying insurance does not have the suitable interest in the home in question.
Claims of burglary are also turned down since buyers may not inform insurance companies that the home would remain unoccupied for a long duration. Another common issue is that burglary is covered by insurance as forced break-ins but not theft which is usually regarded as an inside operation. Several claims are not reported since theft is often for cash and gold which is undisclosed. Underinsurance when good value is kept low in order to reduce premiums is another factor behind rejection. Marine insurance offers coverage for products which are in transit while sending material somewhere or relocating. These claims may be turned down since regular insurance offers coverage for accidents although claims sometimes mention damages or pilferage minus any accidents.
Professionals like architects, doctors and CAs purchase liability insurance many a time in order to offer coverage for negligence linked litigation. The claim numbers is on the lower side in this category. The contracts are usually quite strict in nature with ample chances of claims being turned down. Insurance is bought by smaller businesses in order to coverage any losses of phones, computers and other gadgets. These are turned down on account of negligence, particularly in case of laptops which may experience wear and tear due to rough use.
We usually purchase insurance plans with an emphasis on the overall price. However, we should focus first on the features of the insurance product like home insurance with suitable coverage, marine insurance that covers all possible risks and even mediclaim which has lower waiting periods. While you may have to pay more, you will only benefit in the long run.
