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What happens to your insurance claim if you are late?

LiveMint logoLiveMint 03-07-2017 Deepti Bhaskaran

In a notification dated 28 June 2017, the Insurance Regulatory and Development Authority of India (Irdai) asked all the insurance companies to strictly adhere to the guidelines provided by the regulator to deal with delayed claims.

Here is a look at how a claim gets delayed, and why, despite a delay, it is not so easy for an insurer to reject the claim on grounds of delay alone.

A policyholder is supposed to inform an insurance company as soon as a claim occurs. So, if you, for instance, damage your car in an accident, you need to inform the insurer quickly. Or, if you are hospitalised and pay for the bills, you need to inform the insurer quickly to process the reimbursement if you have a health insurance policy. Insurers like to know as soon as the claim is made so that they can get into the thick of things and investigate all documents and assess the losses.

Also, if there isn’t a deadline, then the insurers won’t know their liabilities and won’t be able to provision for it.

So while some insurers may not specify the time within which you are supposed to intimate a claim, some insurers may put it down clearly. When you sign up for the policy, this is a question you need to ask and get an answer to. For instance, in the case of reimbursement, a health insurance policy document states that notice of claim should be made within 72 hours before admission in case of planned hospitalization and not later than 48 hours or before discharge in case of emergency hospitalization. Subsequently the claim documents need to be submitted within 30 days from the date of discharge.

If an insurer spells out a timeline and you don’t inform the insurer about the claim within that, your claim is considered delayed.

If you delay, then on technical grounds the insurer can reject a claim. However, Irdai, while recognising the importance of having a deadline to intimate a claim with all the relevant documents, held the view that this should not prevent insurers from settling genuine claims where there was a delay in intimating a claim due to unavoidable circumstances. Accordingly, the regulator directed the insurer to not reject paying out delayed claims until the reasons for delay are ascertained and the insurer is sure that the delayed claim would have been rejected even if it was reported on time. Accordingly, insurers were instructed to incorporate additional wordings in the policy document, stating that a delayed claim will be paid where the delay is proven to be for reasons beyond the control of the policyholder. Irdai recently reiterated its stance regarding handling of delayed claims.

While regulations protect you against a delay due to unavoidable circumstances, it is always advisable to intimate a claim as soon as possible.

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