Insurance Firms Face Scrutiny Over Technical Interpretations of Health Policy Claims

Health Insurance Claim Rejection: A Closer Look at Policy Terms and Conditions

Getting a health insurance claim approved can be a daunting task, especially when there's a shortfall in meeting the policy's terms and conditions. Insurance companies often scrutinize claims, focusing on minimum hospitalisation duration, waiting periods, disclosure obligations, and documentation requirements. However, this technical approach can lead to claim rejections, which is why it's essential to understand the intricacies of health insurance policies.

Rigid Eligibility and Terms of Health Policies

Health insurance policies are contracts backed by premium payments and governed by mutually agreed terms and conditions. Aditya Bhattacharya, Partner at King Stubb and Kasiva, explains that claim denials based on technical or procedural breaches are not uncommon in the health insurance sector, particularly in benefit-based policies where eligibility is tied to rigid conditions.

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Even a minor shortfall can trigger claim rejections. Meet Kapadia, Associate, Vice President at Policybazaar, highlights the importance of understanding both the benefits and exclusions of a health insurance policy. "Looking only for benefits that the insurance covers is like reading half of the overall package, but it is essential to go through the exclusions part."

Consumer-Centric Interpretation of Policy Terms

In a significant ruling, the District Consumer Disputes Redressal Commission, Thrissur, recently held that technical conditions relating to duration must be applied reasonably. The central legal issue 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 the advancement of medical science and technology has reduced hospitalisation duration. The commission 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.

Judgment and Implications

The consumer court directed the insurance company 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 of insurance contracts cannot extend to arbitrary or unreasonable repudiation of legitimate claims.