Insurance is the financial protection against any loss, whether it is the loss of life, health or property. A person buys an insurance policy to have financial backup against unforeseen losses, in the form of a contract with an insurance company. It is a method of managing risk associated with the property or life of a person.
When a person purchases an insurance policy, the cost of any unpredicted loss is transferred to the insurance company. The person is required to pay a fee in exchange for mitigating their loss and the insurance company has to pay policy amount to the insured or nominee upon maturity.
However, there are circumstances in which the insurance company may refuse, fail or delay in paying the insurance amount, reject the claim, or there may be some dispute between the insured and insurer regarding the premium paid. This may be due to some service-related problems or any other inadequacy on the company’s part.
It is important to know the correct legal path a person must take against the insurance company in such a case. Here’s the complete guide on how to file a complaint against an insurance company:
- Check Insurance documents: The insured must check the insurance documents to evaluate the terms and conditions of the policy. The insured must have disclosed all relevant information before purchasing the policy and not intentionally concealed any particulars that may affect the validity of the policy or lead to a rejection of the claim.
- Contact the insurance agent or company: After the policy documents are checked and no discrepancies are found, the next step is to contact the agent through whom the insurance policy was purchased or the insurance company directly. If the delay, non-payment or rejection results from some service-related error, then the company usually resolves the problem and pays the policy amount.
- Approach the Insurance Ombudsman: The Insurance Ombudsman acts a mediator that allows the policyholders to settle their insurance complaints in an out-of-court settlement with the insurance company. Presently, there are 17 Insurance Ombudsmen in different cities across India. A complaint can be filed with the ombudsman by the insured, their legal heir, nominee or assignee if::
- The insurance company rejected the insurance claim.
- The insurer did not resolve the insurance complaint in accordance with the insurance policy.
- The insurance company did not respond to the claim within 30 days.
- The total value of a claim, inclusive of expenses is up to Rs. 30 lakhs.
The Insurance Ombudsman can be approached for the following disputes:
- There is a delay in settlement of claims, exceeding the time limit provided under the IRDAI Act, 1999.
- The insurer has rejected the claim for life insurance, general insurance or health insurance either partially or fully.
- There is discord between the insurer and insured regarding the premium paid or due.
- There was a misrepresentation of the terms and conditions of the insurance policy at any time.
- The insurance company refuses to issue the policy even after receiving the premium in life, general or health insurance.
- The insurance company has violated any provisions of the Insurance Act, 1938 or any regulations, guidelines or instructions issued by the IRDAI.
The ombudsman acts as a counselor and provides unbiased recommendations after evaluating the facts and terms of the policy. If the insurer accepts the recommendations as the final settlement, then the insurance company is notified and it has to comply with the decision within 15 days.
If the recommendations are rejected by the policyholder then the ombudsman passes an award within 3 months of receiving the relevant documents and information. This award becomes binding on the insurance company and it has to comply with it within 30 days and inform the ombudsman about its compliance.
- File a consumer complaint: If the policyholder does not receive an adequate response from the Ombudsman or IRDA, then the insured can file a consumer complaint about coaboutnsation. A consumer complaint can be filed against the insurance company on the basis of the policy amount and the compensation claimed. Consumer courts in India are divided into 3 tiers:
- District forum: If the total value of the case is less than Rs. 20 lakhs.
- State Consumer Dispute Redressal Forum: If the total value of the case is more than Rs. 20 lakhs, but less than Rs. 1 crore.
- National Commission: If the total value of the case is more than Rs. 1 crore
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