You pay your premiums faithfully every year. You believe that if a medical emergency strikes, your car meets with an accident, or a family tragedy occurs, your insurance policy will be there to protect you. But for countless policyholders across India, the real battle begins after filing the claim.
Suddenly, there are endless emails, technical objections, hidden exclusions, missing documents, and complicated policy clauses that were never properly explained when you bought the policy. Consumer courts have repeatedly observed that insurers often “show all types of green pastures to customers while selling policies, but invent excuses to deny claims when claim is sought”.
Here are 5 shocking secrets insurance companies don’t want you to know—and how Insurance Upaay helps you fight back.
Secret #1: The “Reasonable and Customary” Trap
Most policyholders believe that once they are admitted to a network hospital, the insurer will pay the full bill. Wrong.
Tucked inside your health insurance policy is a clause called “reasonable and customary” —which allows insurers to pay only for costs they consider “fair and standard”. Insurers can decide whether your treatment, its cost, and even the number of days you spent in the hospital were actually “necessary”.
In fact, this clause is the primary reason for claim rejections, second only to pre-existing disease disputes.
Real Example: A driver in a tier-two town was admitted to the ICU for gastroenteritis. The insurer rejected his ₹25,000 bill, claiming he “could have been treated without hospitalisation”. When you’re in acute pain and a doctor tells you to get admitted, you don’t argue. Yet the insurer used this clause to deny payment.
How Insurance Upaay Helps: Insurance Upaay helps you understand these hidden clauses before you file a claim. The platform provides clear guidance on policy terms, so you know exactly what’s covered—and what isn’t. No more surprises at the hospital billing counter.
Secret #2: Pre-Existing Disease Excuses—Even When It’s Unrelated
This is perhaps the most common and frustrating tactic insurers use.
You file a claim for an accident or an unrelated illness. The insurer digs through your medical history, finds a mention of diabetes or hypertension from years ago, and rejects your claim—even when the condition has nothing to do with your current treatment.
Real Example: A Rajkot resident met with an accident and ran up a hospital bill of ₹7 lakh. His insurer rejected the claim, citing non-disclosure of hypertension and diabetes—conditions completely unrelated to the accident. The consumer court ruled in his favour, terming the rejection a “deficiency in service”.
In another case, an insurer rejected a COVID-19 claim because the policyholder had tuberculosis 20 years ago. Consumer forums have repeatedly held that insurers cannot deny claims using unrelated past medical conditions.
Yet, insurance companies continue to use this tactic. They rely on policyholders’ medical histories as recorded in doctors’ notes and discharge summaries to find any excuse to deny payment.
How Insurance Upaay Helps: Insurance Upaay provides access to advisory services that help you understand what needs to be disclosed and what doesn’t. If your claim is rejected on unrelated grounds, Insurance Upaay guides you through the appeal process—including approaching the Insurance Ombudsman or consumer court.
Secret #3: Hidden Exclusions Buried in the Fine Print
Let’s be honest—how many of us actually read the entire policy document? Insurance companies know this. They bury exclusions, waiting periods, depreciation rules, co-payment provisions, and technical conditions deep inside the policy wording.
Common exclusions include:
- Initial waiting period of 30 days for any coverage
- Waiting periods for pre-existing diseases (typically 2-4 years)
- Specific ailments like hernia, cataract, and joint replacement
- Maternity expenses
- Cosmetic surgery, dental treatments (without accident), and unproven treatments
Real Example: A Mumbai-based finance professional ported his family floater policy after five years of continuous coverage. When his mother was hospitalised, the new insurer rejected the ₹56,156 claim, citing a “waiting period exclusion” for an intervertebral disc disorder—despite clear portability assurances. When he challenged this, the insurer changed the reason to “misrepresentation of documents” without any clarification.
A consumer court has clearly ruled that health insurers cannot deny claims based on exclusion clauses unless those exclusions were clearly disclosed, explained, and accepted by the policyholder at the time of issuance. Yet, insurers continue to use these hidden clauses to deny legitimate claims.
How Insurance Upaay Helps: Insurance Upaay simplifies the policy document for you. It highlights key exclusions, waiting periods, and conditions upfront—so you know exactly what you’re signing up for. No more fine-print surprises when you need coverage the most.
Secret #4: The Delay, Deny, and Defend Strategy
There’s a well-known strategy in the insurance industry: Delay, Deny, and Defend.
Insurers use several tactics to wear you down:
- Seeking additional documents repeatedly to tire out the claimant
- Asking for recorded statements immediately after an incident to catch inconsistencies
- Invoking vague clauses to argue that the injury or incident is excluded under policy wording
- Blaming pre-existing conditions even when the illness or injury is unrelated
- Closing claims without informing the policyholder
Real Example: A Supreme Court lawyer’s wife filed a health insurance claim of around ₹1.10 lakh. The insurer closed the claim within two months without informing them, saying documents weren’t submitted. The moment the lawyer stepped in legally, the amount was credited within 5 days. This clearly shows the claim was legitimate—the insurer was simply hoping the policyholder would give up.
But here’s what insurers don’t tell you: IRDAI regulations mandate strict timelines. For health insurance reimbursement claims, insurers must settle or reject the claim within 30 days of receiving the last necessary document. If a claim requires investigation, it can be extended to 45 days—but the insurer cannot keep a claim in limbo indefinitely. For cashless claims, the timeline is even tighter—3 hours for discharge authorization.
If the insurer delays beyond these timelines, they are liable to pay interest at 2% above the bank rate for the delayed period.
How Insurance Upaay Helps: Insurance Upaay provides real-time claim status tracking. You can see exactly where your claim stands—whether it’s under review, approved, or if additional documents are needed. No more endless phone calls. If your claim is delayed beyond the mandated timeline, Insurance Upaay helps you escalate the matter—whether through the insurer’s grievance redressal officer, the Insurance Ombudsman, or consumer forums.
Secret #5: They Hope You Won’t Fight Back
This is the dirtiest secret of all.
Insurance companies know that most policyholders don’t know their rights. They know that people are scared of legal battles, confused by the process, and exhausted from dealing with medical emergencies. So they reject claims, hoping you’ll simply accept it and move on.
But you have rights—powerful ones.
Right #1: The Insurance Ombudsman
If your claim is rejected or delayed, you can approach the Insurance Ombudsman (Bima Lokpal) for a free, expedited, and binding resolution. You must first file a grievance with your insurer. If they don’t respond satisfactorily within 30 days, you can approach the Ombudsman within one year of the rejection. The Ombudsman can handle cases up to ₹50 lakh.
Right #2: Consumer Court
If you’re unsatisfied with the Ombudsman’s verdict, you can file a case in Consumer Court. Consumer courts across India have repeatedly ruled in favour of policyholders, ordering insurers to pay claims with interest and compensation.
Right #3: Section 45 of the Insurance Act
For life insurance policies, after three years, insurers cannot repudiate policies merely for inaccurate statements unless fraud is established.
Right #4: Written Rejection Reasons
You have the right to demand written reasons for any claim rejection.
Real Example: A policyholder’s health insurance claim of ₹2.25 lakh was reduced to just ₹69,958 by Star Health. The consumer court ruled that insurers cannot make arbitrary deductions and ordered the full balance with interest.
How Insurance Upaay Helps: Insurance Upaay empowers you with knowledge. It provides step-by-step guidance on:
- Filing internal grievances with the insurer
- Approaching the Insurance Ombudsman
- Escalating to consumer courts
- Understanding your legal rights under IRDAI regulations
You don’t need to be a lawyer to fight back. You just need Insurance Upaay.
Final Thoughts
Insurance is a contract of trust. You pay premiums in good faith, believing the insurer will be there when you need them most. But all too often, insurers use hidden clauses, technicalities, and delay tactics to avoid paying legitimate claims.
The good news? You don’t have to face this alone.
Insurance Upaay is your partner in navigating the complex world of insurance claims. From digital claim submission and real-time tracking to advisory services and escalation support, Insurance Upaay ensures that you get what you’re entitled to.
Don’t let insurance companies hide behind fine print and technical jargon. Know your rights. Fight back. And let Insurance Upaay handle the rest.