Insurance Claim Rejected? The Steps That Actually Work

If your insurance claim has been rejected, the practical route has three stages. First, file a written grievance with the insurer and ask for the rejection to be reviewed, quoting the policy clause and the IRDAI rule that applies. Second, if the insurer rejects the grievance, does not reply within a month, or gives an unsatisfactory reply, complain to the Insurance Ombudsman within one year, which costs nothing and covers compensation up to Rs 50 lakh. Third, as an alternative, file a complaint before the Consumer Commission.

What makes these steps work is knowing the rules the insurer has to follow. IRDAI's master circulars issued in 2024 removed several reasons insurers used to rely on, and they set time limits for decisions. A rejection letter that ignores them is a weak rejection.

Read the rejection letter first

IRDAI's Master Circular on Protection of Policyholders' Interests, 2024 (5 September 2024) says that when a health claim is repudiated, rejected or partly disallowed, the details must be communicated to the claimant with reference to the specific terms and conditions of the policy. So the letter should name the clause. Write down:

• the exact reason given, and the clause or exclusion cited;
• whether the rejection is full or partial, and the amount disallowed;
• the date of the letter and the date you received it, because the Ombudsman's one-year limit runs from when you receive the insurer's reply to your written complaint, or from the end of the month it had to reply;
• the grievance and Ombudsman contact details, which IRDAI requires the insurer's response letters to include.

Then compare the reason with the policy wording you were given, not a brochure. Many rejections turn on a waiting period, an exclusion, a sub-limit or alleged non-disclosure of an earlier illness.

Grounds the insurer can no longer rely on

The 2024 policyholder master circular contains several rules that are directly useful in a dispute:

• For life, health and general insurance alike, no claim shall be rejected or closed for want of documents or for delayed intimation of claim.
• In general insurance, all documents needed to accept the risk are to be called for at the underwriting stage, and the customer submits only documents directly related to the claim.
• In health insurance, after the claim is intimated, the insurer or TPA collects the required documents from the hospital, and the policyholder is not required to submit them.
• No health claim can be repudiated without the approval of the insurer's Product Management Committee or its three-member Claims Review Committee.
• In retail general insurance, the insurer cannot repudiate a claim for breach of a warranty or condition that is not relevant to the nature or circumstances of the loss, or for the policyholder's delay where the delay has not increased the assessed loss.
• In life insurance, no claim is to be repudiated without legally tenable evidence, and a policy cannot be contested on any ground after three years from the later of the policy date, commencement of risk, revival or rider date.

IRDAI's Master Circular on Health Insurance Business (29 May 2024) adds that after a moratorium period of 60 months of continuous coverage, no health policy or claim can be contested for non-disclosure or misrepresentation except for established fraud. Credits from ported or migrated policies count towards those 60 months.

Timelines the insurer must meet

• Health, cashless: decision on cashless authorisation immediately, and not more than one hour after the request.
• Health, discharge: final authorisation within three hours of the hospital's discharge request; any extra amount charged by the hospital for delay beyond three hours is to be borne by the insurer from shareholders' funds.
• Health, reimbursement: claims other than cashless to be settled within fifteen days from submission of the claim.
• Life: death claims within fifteen days of intimation, or forty-five days where investigation is warranted.
• General insurance: surveyor to report within fifteen days of appointment, and the insurer to decide within seven days of the report or fifteen days from allocation to the surveyor, whichever is earlier (this does not apply to property on reinstatement value basis).
• Delay in settlement: interest at bank rate plus 2 percent from the date of intimation till payment, to be paid by the insurer on its own.

Common rejection reasons and how to answer them

Every dispute turns on its own policy wording, but most rejection letters use one of a handful of reasons. The way to answer each is to go back to the documents rather than argue in general terms.

• Pre-existing disease or non-disclosure: ask the insurer to identify the medical record it relies on and the question in the proposal form you allegedly answered wrongly. Check how long you have been continuously covered, because after the 60-month moratorium only established fraud can be raised in health insurance.
• Waiting period: check the policy schedule for the actual waiting period for that illness or procedure, and whether credit from an earlier or ported policy was given.
• Exclusion or not medically necessary: ask for the medical opinion relied on, and get your treating doctor to explain in writing why the treatment or admission was needed.
• Sub-limits and deductions: compare each deduction with the room rent cap, co-payment or sub-limit in the schedule, and ask for an itemised settlement sheet.
• Breach of a policy condition: in general insurance, ask whether the condition had anything to do with the loss, since an irrelevant breach cannot be used to repudiate a retail claim.
• Fraud or misrepresentation: ask for the investigation report. An allegation of fraud is serious, and this is a point at which professional help is worth considering.

Keep everything in writing. Phone conversations with a call centre leave no record you can show the Ombudsman, while an email chain with dates does. Where the insurer's surveyor or investigator visits, note the date and what was asked and handed over.

Step 1: a written grievance to the insurer

Under the 2024 policyholder master circular, an insurer must acknowledge a complaint immediately and resolve it within 14 days, giving reasons with reference to the policy terms if it does not accept the complaint. Complaints can be tracked on the insurer's grievance portal, its call centre, or IRDAI's Bima Bharosa system, with which insurers' grievance databases must be synchronised.

Your grievance should be addressed to the grievance redressal officer and should state the policy number and claim number, quote the rejection reason, explain why it is wrong with reference to the policy clause and the IRDAI rule, list the documents attached, and say what you want: settlement of the claim with interest. Our insurance claim rejection appeal template follows this structure. If the claim was never properly lodged, start with a clear insurance claim letter so that the date of intimation is on record.

Step 2: the Insurance Ombudsman

The Insurance Ombudsman Rules, 2017 set up Ombudsman offices for complaints against insurers and insurance brokers, including partial or total repudiation of claims, delay in settlement beyond IRDAI's time limits, and disputes over policy terms in so far as they relate to a claim. Rule 14 sets the conditions:

• You must first have made a written representation to the insurer (by letter, email or the insurer's website).
• You can approach the Ombudsman if the insurer rejected it, did not reply within one month, or replied and you are not satisfied.
• The complaint must be made within one year of the rejection or unsatisfactory reply, or within one year after the month for reply expired. The Ombudsman can condone delay after hearing the insurer.
• No complaint lies if the same subject is pending before or decided by a court, consumer forum or arbitrator.
• You file with the Ombudsman for the area where the insurer's branch is located or where you live.

Under Rule 17, the Ombudsman cannot award compensation above Rs 50 lakh, including expenses. The Council for Insurance Ombudsmen states that the compensation sought should not exceed Rs 50 lakh, and that the Ombudsman does not charge any fee. Complaints can be filed online through the Council's portal, by email, by post or in person. If the matter is not settled by mediation, the Ombudsman passes a reasoned award, normally within three months of receiving everything needed from the complainant. Draft amendments to these Rules, which would change the Ombudsman's powers, were published for public comment in November 2025, so check the Council's website for the Rules in force when you file.

The award binds the insurer, which must comply within thirty days. IRDAI's circulars add a penalty of Rs 5,000 per day, payable to the complainant, if the insurer does not honour the award in time. Attach the policy schedule and wording, the claim form and bills, the rejection letter, your grievance to the insurer with its acknowledgement and reply, and a short chronology. Rule 14(2) requires the complaint to state your name and address, the branch or office complained against, the facts with supporting documents, the nature and extent of the loss, and the relief sought, so make sure each of these appears. Our insurance ombudsman complaint template sets out the facts, documents, loss and relief in the order the Rules require.

Step 3: the Consumer Commission

A rejected claim can also be taken to the Consumer Commission as deficiency in service under the Consumer Protection Act, 2019. The complaint must be filed within two years of the cause of action under Section 69, with delay condonable for sufficient cause. Pecuniary jurisdiction depends on the value of goods or services paid as consideration, under the 2021 jurisdiction rules: up to Rs 50 lakh before the District Commission, above Rs 50 lakh and up to Rs 2 crore before the State Commission, and above that before the National Commission.

Choose one forum. The Ombudsman will not take up a matter already before a consumer forum. The Ombudsman is quicker and free but limited to Rs 50 lakh; the Commission can also award compensation for harassment and costs, but usually takes longer. Our guides on choosing the right consumer forum and filing a complaint online cover the procedure, and a consumer complaint template is available for the petition itself.

A checklist from rejection to resolution

1. Get the full policy document, the rejection letter and every claim document and email.
2. Identify the clause relied on and check it against the policy wording and the IRDAI rules above.
3. File a written grievance with the insurer and keep the acknowledgement; escalate on Bima Bharosa if needed.
4. Wait for the reply, which is due within 14 days, or for one month if you plan to go to the Ombudsman without a reply.
5. File before the Ombudsman within one year, or before the Consumer Commission within two years, not both.
6. Attend the hearing (online hearings are allowed) with a short chronology and copies of the key documents.

Large claims, fraud allegations and disputes over pre-existing disease often benefit from a lawyer's help, especially before the Consumer Commission. You can find consumer protection lawyers on LegalFirms, or read questions other policyholders have asked about similar rejections.