Rights of a Policyholder
Insurance contracts are based on "Uberrimae Fidei" (Utmost Good Faith). However, this applies to both the insurer and the insured. Policyholders have specific rights protected under the IRDAI Regulations and the Consumer Protection Act, 2019.
- Free Look Period: Right to return the policy within 15 days of receipt if unsatisfied.
- Timely Settlement (IRDAI): Insurers must acknowledge claims within 3 days and settle/reject within 30 days of receiving the last document. Delays attract interest at Bank Rate + 2%.
- Clear Explanations: Right to know specific reasons for any deduction or rejection.
- Portability: Right to transfer your health policy to another insurer without losing continuity benefits (waiting periods).
The 3-Year Rule (Section 45, Insurance Act)
No Policy Called in Question after 3 Years:
Under Section 45 of the Insurance Act, 1938 (as amended), a life insurance policy cannot be called in question by the insurer on any ground (including fraud or misstatement) after 3 years from the date of the policy. This is a massive protection for claimants.
10 Landmark Supreme Court Judgments
Texco Marketing vs. TATA AIG (2022)
Exclusion clauses must be highlighted. If printed in fine print and not explained, they cannot be used to reject a claim.
Manmohan Nanda vs. United India Insurance (2021)
Once a policy is issued after medical tests, the insurer cannot later reject a claim citing a pre-existing condition.
Om Prakash vs. Reliance General Insurance (2017)
A genuine claim (like vehicle theft) cannot be rejected solely because the owner informed the insurer a few days late.
Jai Prakash vs. United India Insurance (2018)
Delhi HC held that discrimination against genetic disorders in health insurance is unconstitutional.
Sushil Kumar vs. The Oriental Insurance (2023)
In case of ambiguity in policy terms, the interpretation favoring the insured (policyholder) must be adopted.
Gujarat HC vs. Union of India (2021)
Directed insurers to settle COVID-19 claims promptly and not deduct arbitrary amounts for PPE kits/consumables.
Sharbati Devi vs. Usha Devi (1984)
A 'Nominee' is only a custodian of the insurance money. The actual owners are the legal heirs of the deceased.
New India Assurance vs. Pradeep Kumar (2009)
The Surveyor's report is important but not the final word. If arbitrary, the Consumer Court can override it.
New India Assurance vs. Srinivasan (2019)
TPA/Insurers cannot act as doctors. If a treating specialist prescribes hospitalization, the insurer cannot deny it.
Biman Krishna Bose vs. United India (2001)
An insurer cannot arbitrarily refuse to renew a Mediclaim policy just because the insured made a claim in the previous year.
Dispute Resolution Mechanisms
1 Internal Grievance Redressal (GRO)
First, submit a written complaint to the company's Grievance Redressal Officer (GRO). They must respond within 15 days.
2 Insurance Ombudsman (CIO)
If unsatisfied, you can approach the Insurance Ombudsman. This is a quasi-judicial body for claims up to ₹30 Lakhs. It is cost-free and faster.
3 Consumer Commission
For larger claims or deficiency in service, file a complaint in the District/State Consumer Commission under the Consumer Protection Act, 2019.
Document Checklist for Disputes
- Policy Document (Schedule & Terms)
- Rejection Letter (Repudiation Letter)
- Medical Case Papers / Discharge Summary
- Correspondence with TPA/Insurer
- Copy of Proposal Form (to prove disclosure)
Claim Rejected Unfairly?
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