7 Reasons Behind Insurance Claim Rejection And How To Avoid Them

Rejection of insurance claims can be very frustrating. You work hard, invest in the right instrument to build wealth and get insured to safeguard your family and its financial future. However, a situation can develop wherein the insurance claim gets rejected due to a minor but crucial point like wrong information provided at the time of opting for the policy. This defeats the whole purpose of availing a policy and banking on it for your future needs. It is thus important to understand the reasons which can lead to a claim rejection and avoid them. This will also ensure a hassle free claim process for the dependents.

Let’s take a look at 7 top reasons that can result in a claim rejection:

Cold Attitude Towards Insurance

Many of us end up buying insurance at the last moment as a tax saving instrument by the end of financial year without paying heed to all the details. It makes sense that rather than relying on insurance agents for filling up a proposal form, you should complete all the formalities with due diligence so that your loved ones don’t face any difficult situation while making the claim. Keep yourself informed about the policy and related process. It would be wise to keep a copy of the same for future reference and ratify all the details being provided once the policy is issued. This would help you to deal with discrepancy if any with the insurer.

Providing Incorrect Information

You should maintain transparency and provide all information correctly while availing a policy. Information pertaining to your age, height, weight, occupation, income details, existing policy details and other details sought in the form should be provided accurately. It is a common tendency to hide details of other policies. This must be avoided to evade claim rejection in future.

Disclose Pre-existing Ailments

Claims which are made on account of pre-existing ailments are generally subjected to rejection by the life insurers in case they are not revealed in the proposal form. Any pre-existing diseases along with family’s medical history should be disclosed. It is also necessary to diligently read the terms and conditions to understand the disease coverage for the specific policy or any riders.

Specifying Nature Of Your Job

This is a vital declaration while availing a policy. There are certain jobs that carry no risks at all, whereas there are some jobs that are high risk or are life threatening. People working in a mine, fire-fighting, high rise construction etc. involve high risks. Your nature of job must be communicated to the insurer prior to buying the insurance policy. The claim can be rejected in case the nature of job is not disclosed and insurer feels that it is hidden from them.

Don’t Let The Policy Lapse

Only active policies are eligible for claims, hence try to be regular with your premium payments.  In case you miss paying a premium, you should ensure that the same is paid within grace period to avoid a policy lapse.

Irrelevant Usage

In case of Automobile Insurance, the claim may get rejected if you have bought an auto insurance policy for a normal private car, but your vehicle has been on use for commercial purposes. If you use your vehicle for commercial purposes or as a passenger vehicle, then you should buy relevant policies like goods carrying vehicle insurance, passenger carrying vehicle insurance etc. At times it is seen that an auto insurer accepts claim but instead of paying full amount, they end up paying a part of it – this is purely because of the vehicle’s depreciation value over a period of time. You may not be eligible for any claim if your vehicle meets an accident due to reasons like driving under influence of alcohol/drug, driving without valid license, or illegal means.

Update Nominee Details

It is advisable to keep the nominee details updated as per your relationship/marital status. Be it your aged parents or your spouse, who so ever would want financial support in your absence should be named as nominee.

If a policy holder is careful with the above mentioned parameters, then claim rejection by insurance companies can easily be avoided.

(The author is CEO of BankBazaar)