All insurance policies stipulate a time frame for lodging a claim after the incident of loss.
For mediclaim policies, it was 30 days earlier. Now, the time frame has been revised to seven days.
If the claim is lodged beyond this period, insurance companies conveniently reject it on the ground that it was not lodged on time, without bothering about the genuineness of the claim. This is not permissible, as held by the Maharashtra State Commission as well as the National Commission.
Nanasaheb Hanumant Jadhav had a personal accident insurance policy issued by New India Assurance.
The policy was for 10 years with a sum insured of Rs. 75,000.
He was riding a bullock cart loaded with fodder when he met with an accident.
He got caught under the cart and suffered a spinal injury at his waist, resulting in his getting bed-ridden.
He later lodged a claim that got rejected, as it was not within 30 days, in accordance to the terms of the policy.
This inhumanitarian approach compelled Jadhav to file a consumer complaint before the District Forum, which directed the insurance company to settle the claim.
The insurance company appealed against the order, insisting the claim had to be rejected as it was not filed within 30 days.
The Maharashtra State Commission dismissed the appeal, holding that the condition regarding the time limit was not mandatory, but merely to facilitate prompt scrutiny of the claim.
Hence, this clause cannot be used to the detriment of the insured and the repudiation of the claim on this ground was not justified. [New India Assurance Co Ltd v/s Nanasaheb Hanumant Jadhav & Others - 2005 (2) CPR 24].
A similar view was taken by the National Commission.
The Maharashtra
government had insured farmers under a group personal accident insurance scheme to compensate their families, in case of accidental death or disability.
Nearly a crore farmers were covered for Rs. 1 lakh each, for a total premium of Rs. 6.48 crore, paid by the state government to ICICI Lombard for issuing this policy.
Many claims lodged under the policy were rejected as the claim was not lodged within 30 days, without considering these on merits.
The National Commission observed that it had consistently been of the view that claims should be settled on merits and not rejected on such a technical plea. [State of Maharashtra v/s ICICI Lombard General Insurance Co Ltd - Interim order dated 20.08.2008 in complaint no 27 of 2008].
Another interesting point is whether the insurance company has to pay interest for delay in settlement of a claim?
Paramount Iron & Steel Works had filed a complaint against Oriental Insurance for delay in settlement of the claim.
The insurance company justified the delay on the ground that the claim was huge.
The National Commission observed that when the claim is huge and is not settled, the insured suffers a lot and the whole purpose of obtaining a cover gets frustrating.
Hence, for such a delay, the insurance company must pay an adequate compensation.
Since Regulation 9 (6) of the Insurance Regulatory and Development Authority (protection of policy holders' interest) Regulations 2002 stipulates that interest is payable at a rate - which is two per cent above the bank rate prevalent at the beginning of the financial year in which the claim lodged - the commission directed the insurance company to pay interest at this rate. [Paramount Iron and Steel Works Pvt Ltd v/s Oriental Insurance Co Ltd & Anr III (2007) CPJ 2 (NC)]
The author is a consumer activist 
All insurance policies stipulate a time frame for lodging a claim after the incident of loss.