Why Your Insurance Claim Can Get Rejected And How to Prevent It

Insurance is essential—whether it’s for your health, life, car, or home. But what happens when your claim is unexpectedly denied? Unfortunately, this is more common than many realize.

According to the Insurance Regulatory and Development Authority of India (IRDAI), health insurance claim rejections increased by 19.10% in FY 2023–24 compared to the previous year. This trend is especially worrying for policyholders with limited financial resources who rely on insurance during critical times.

If you’re concerned about claim rejections and want to avoid becoming part of that statistic, here are the most common reasons claims are denied—and how you can prevent it from happening to you.

1. Incomplete or Incorrect Documentation

One of the leading causes of claim rejection is missing or incorrect paperwork. Insurers require complete documentation to verify the validity of a claim.

Examples:

• Health Insurance: Original bills, discharge summaries, prescriptions, diagnostic reports
• Life Insurance: Valid ID proofs, policy documents, nominee details
• Motor Insurance: First Information Report (FIR), repair estimates, driver’s license

How to Prevent It:

• Keep all relevant documents organized and safely stored.
• Double-check the insurer’s list of required documents before filing a claim.
• If unsure, consult trusted financial advisors or insurance experts who can assist with the claim process.

2. Misrepresentation or Non-Disclosure of Information

Providing false information—or failing to disclose key details—can invalidate your insurance coverage and result in claim denial.

Common Examples:

• Not disclosing pre-existing medical conditions
• Hiding lifestyle risks like smoking or drinking
• Failing to report a high-risk occupation

How to Prevent It:

• Be completely transparent when filling out the insurance application.
• Disclose even minor health issues.
• If your health status or job changes after buying the policy, notify your insurer immediately.

3. Claim Not Covered Under the Policy

Sometimes, claims are denied simply because the policy doesn’t cover the situation.

Common Misunderstandings:

• Motor insurance doesn’t cover accidents due to drunk driving.
• Health insurance is not a substitute for life insurance, yet some people buy only one expecting both benefits.
• Certain conditions or procedures may be excluded or require additional riders.

How to Prevent It:

• Read the policy wording carefully to understand inclusions and exclusions.
• Ask your insurer or agent to explain the coverage in plain terms.
• Consider add-ons or riders for better protection.
• Compare health insurance plans online to find one that fits your specific needs.

4. Missed Premium Payments and Policy Lapse

Your policy must be active to be valid. Missing premium payments can cause the policy to lapse, leaving you without coverage when you need it most.

How to Prevent It:

• Set up automatic payments to avoid missing due dates.
• Monitor email or SMS reminders from your insurer.
• If you miss a payment, check if you’re still within the grace period.
• Speak to the insurer to see if your policy can be reinstated.

5. Claims Filed During the Waiting Period

Most insurance policies have a waiting period—usually ranging from 30 days to several years—during which certain claims cannot be made.

How to Prevent It:

• Buy insurance early, before any symptoms or conditions arise.
• Compare policies to understand and minimize waiting periods.
• Avoid filing claims before the waiting period is over, unless it’s for emergency coverage that’s allowed upfront.

Final Thoughts

Claim rejection isn’t always the insurer’s fault—often, it stems from small oversights, misunderstandings, or missed details by the policyholder. But the good news is, most rejections are avoidable.

By staying informed, organizing your documentation, disclosing information honestly, and reviewing your policy carefully, you can reduce the risk of denial. And if the process ever feels overwhelming, don’t hesitate to seek professional financial or insurance advice.

Protect yourself, your family, and your assets—by making smart, informed insurance choices.