Insurance claims: Understanding the moratorium clause for payout

If claims are rejected by insurance companies, the laws provide a powerful recourse to protecting your rights

- Aprajita Sharma

The fatal shooting of Brian Thompson, chief executive of UnitedHealth Group's insurance arm, has turned the spotlight on insurance companies rejecting policyholders' claims for various reasons. In India, insurance laws provide policyholders with a strong legal recourse if claims are rejected arbitrarily, but securing payment from the insurers may still require significant effort.

Sample this: Kolkata-based Sabita Mukherjea was hospitalized due to a respiratory tract infection. "First, the insurer did not approve the cashless claim. Subsequently, it also rejected the reimbursement claim saying hospitalization was not necessary in my case. I paid more than seven premiums for the policy," Mukherjea said.

However, according to the moratorium clause for health insurance policies, as defined by the Insurance Regulatory and Development Authority of India (Irdai), if a policyholder has paid five or more annual premiums, an insurance company cannot reject claims even if they had not disclosed a pre-existing disease or other important information. "Policies and claims of health insurance are contestable on any grounds of non-disclosure and/or misrepresentation except for established fraud, after completion of the moratorium period, 60 months of continuous coverage," reads section 13 of chapter I of the Master Circular on IRDAI (Insurance Products) Regulations 2024-Health Insurance.