An insurance policy can be the ticket to financial security for you and your family when calamity strikes. Yet, a lot of policyholders are left high and dry when their claims are rejected, the most commonly cited reasons being non-compliance of rules and making claims not covered by the policy. When faced with a similar situation, three policyholders approached various consumer courts for justice. Recently, two won respite as the courts ruled in their favour, while the third didn't as he failed to comply with Irda regulations. Here's a look at these three rulings and what they mean for you.
Laser surgery is not cosmetic in nature.
The case:KP Desai took a health insurance policy from the United India Insurance Company in 1990, which he renewed every year. In 1997, he underwent corrective lasik, or laser eye surgery, for one eye and the hospital bill came to Rs 50,000. However, his claim for reimbursement was rejected by the insurer, which said that the surgery was purely cosmetic and, hence, not covered by the policy. Desai filed a complaint with the south Mumbai District Consumer Disputes Redressal forum in 1997. It ruled in his favour on 19 April 2004. The insurance company then filed an appeal with the Maharashtra State Consumer Disputes Redressal Commission, which upheld the earlier ruling.
How it impacts you:Earlier, health insurers clearly stated that laser eye surgery was cosmetic and excluded it from the policy. However, the ruling questions the assumption of the surgery being cosmetic. As a person opts for it only to correct his vision, it cannot be said that the surgery is only to enhance his appearance. In future, insurers may refrain from listing lasik under its set of exclusions, though they may charge a higher premium from customers with defective vision.
Inform insurance company about transfer of vehicle to claim benefit.
The case:On 30 November 2006, Ashok Kumar purchased a used car, which was insured by the New India Assurance. However, he did not inform the company about the transfer of registration, or ask it to shift the policy in his name. On 12 March 2007, the car was stolen and Kumar filed a claim. However, it was rejected on the ground that the policy was not in his name. The Delhi District Commission and the State Commission ruled in favour of Kumar. However, the National Commission ruled in favour of the New India Assurance, stating that according to Irda regulation, it is mandatory to inform the insurance company about the transfer of vehicle within 14 days, failing which the company is not liable to reimburse a claim.
How it impacts you:If you are buying a preowned car, inform the insurance company about the transfer of registration within 14 days of the sale and also get the policy transferred in your name. If you fail to do so, only third party claims will be admissible under Section 157 of the Motor Vehicles Act, which states that the certificate of insurance 'shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred'.
Damage need not be caused by 'fire' alone.
The case:To insure a stock of molasses, Ahmedabad-based company, Consumer Education and Research Society, paid a premium of Rs 38,520 for a fire policy of Rs 2.25 lakh bought from IFFCO-Tokio General Insurance, in 2003. During the validity of the policy, a portion of the stock got burnt due to spontaneous combustion. The insurer rejected the company's claim stating that since the stock was not burnt due to an actual fire, it was not liable to pay. However, the National Consumer Disputes Redressal Commission ruled that this amounted to deficiency of service on the part of the insurance company and it was liable to pay damages amounting to Rs 1.14 lakh, along with 10% interest per year from 2003 onwards.
How it impacts you:Now, any damage to stock due to fermentation, natural heating or spontaneous combustion will also be covered by a fire policy. The insurance company's contention that the complaint be dismissed since the petitioners were not 'consumers' as they had taken the policy in relation to commercial activity was rejected by the Commission. So, even those who purchase goods or services for commercial activity can now approach a consumer court if they are not satisfied.
5 tips to ensure your claim is not rejected
1. Don't trust the agent blindly
Fill your insurance form yourself; don't let the agent do it for you. Keep a copy of the form and compare it with the policy document. In case of a discrepancy or inaccuracy, notify the insurer.
2. Don't hide your medical history
Disclose all relevant facts regarding the medical history of your family. Be honest if you use tobacco or alcohol.
3. Don't avoid tests
If you undergo medical tests demanded by the insurer, it reduces the chances of a claim being rejected on the ground of pre-existing illness.
4. Provide correct information
State your age, occupation, income and insurance coverage honestly. Do not submit documents with incorrect or incomplete information.
5. Pay premiums on time
If you don't, the policy will lapse. Typically, you get 15-30 days of grace period to pay if you are late, after which the policy will lapse permanently.