Consumer Court Ruling Highlights Technicalities Behind Rejected Health Insurance Claims

Health Insurance Claim Denials: A Closer Examination of Policy Terms and Conditions

When it comes to getting a health insurance claim approved, a shortfall in meeting the policy terms and conditions can easily lead to rejection. Insurance companies can become highly technical in identifying such shortfalls, particularly around minimum hospitalisation duration, waiting periods, disclosure obligations, or documentation requirements.

The mediclaim policy is an insurance contract backed by premium payments and governed by mutually agreed terms and conditions. Rigid eligibility and terms and conditions of health policies can lead to claim denials based on technical or procedural breaches, which are not uncommon in the health insurance sector, particularly in benefit-based policies where eligibility is tied to rigid conditions.

Understanding the Exclusions Part

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Even a minute shortfall can trigger claims getting rejected. It is essential to go through the exclusions part of the policy, as looking only for benefits that the insurance covers is like reading half of the overall package. Meeting the policy's duration of hospitalisation terms is a critical aspect, and any shortfall can lead to claim denials.

Consumer Commission's Ruling

In a significant ruling related to meeting the health policy's duration of hospitalisation terms, the District Consumer Disputes Redressal Commission, Thrissur, recently held that technical conditions relating to duration must be applied reasonably. The central legal issue before the commission was the insurer's rejection of a COVID-19 insurance claim due to a shortfall of 2.5 hours in completing the mandatory 72 hours of hospitalisation.

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The consumer commission observed that advancement in medical science and technology has reduced hospitalisation duration. Medical procedures that needed prolonged hours earlier can now be accomplished in much less time. Hence, shorter hospital stays do not imply less severity of illness, which fact makes it axiomatically implied that technical conditions relating to duration must be applied reasonably.

The Covid-19 insurance policy promised a lump sum of Rs 1 lakh upon diagnosis and at least 72 hours of continuous hospitalisation. The complainant was hospitalised from October 16 to 19, 2020, but the insurer rejected the claim, stating that the stay lasted only about 70 hours, not the stipulated 72 hours.

Consumer Commission's Decision

Upon review, the consumer court held that the insured had complied with the hospitalisation requirements and that the shortfall of about 2.5 hours did not amount to a fundamental breach. The insurance company has been directed to pay Rs 1 lakh as the insured amount, Rs 10,000 as compensation, and Rs 5,000 towards litigation costs, along with 9 percent annual interest from the complaint filing date.

This judgment reinforces that strict construction cannot extend to arbitrary or unreasonable repudiation of legitimate claims. Insurance policies should be interpreted in a commercially sensible manner, and the interpretation of terms and conditions should advance the purpose of the policy rather than defeat it.