Health insurance claim rejected: reasons, the repudiation letter and how to appeal

Why are health insurance claims rejected?

Most rejections rest on one of a handful of policy clauses: non-disclosure, a waiting period, an exclusion, or the policy not being in force. Official data doesn’t break rejections down by reason, so treat any “top reason” percentage you see online with caution. The common grounds are:

• Non-disclosure of a pre-existing condition. Under the Insurance Products Regulations, 2024, a pre-existing disease is one diagnosed, or treated or advised on by a doctor, in the 36 months before the policy started. See pre-existing disease.
• A waiting period. The illness falls in the initial waiting period (commonly 30 days), a specific-disease waiting period (up to 36 months under the 2024 Regulations; commonly 24) or the pre-existing-disease waiting period (up to 36 months). See waiting periods.
• An exclusion. The treatment is on the policy’s list of exclusions, such as cosmetic surgery in many wordings.
• Admission not needed. The insurer says the treatment could have been given as an outpatient, or the admission was only for tests.
• Policy not in force. The premium wasn’t paid within the grace period (30 days for annual premiums), so there was a break in cover.
• Suspected fraud or misrepresentation, such as bills that don’t match the treatment records.

Two grounds are now restricted. IRDAI’s September 2024 policyholder-protection Master Circular says no claim shall be rejected or closed for want of documents or for delayed intimation, and the 2024 policyholder-protection Regulations require insurers to ask for all the documents they need at one go.

How to read a repudiation letter

A repudiation letter should tell you exactly which clause the insurer relied on and what evidence it used. IRDAI’s 2024 Master Circular requires insurers to give full details of a repudiation with reference to the specific policy terms and conditions, and a repudiation needs the approval of the insurer’s Claims Review Committee or Product Management Committee. Check the letter for:

1. Claim and policy numbers, the patient’s name and the hospitalisation dates.
2. The decision: full repudiation, or a partial disallowance of some items.
3. The clause: the clause number or exclusion code. Many wordings still use the standard codes IRDAI introduced in 2019–2020, such as Excl01 (pre-existing diseases), Excl02 (specified disease or procedure waiting period) and Excl03 (30-day waiting period).
4. The evidence: often a line from the discharge summary, such as “known case of diabetes for 5 years”, or a past consultation record.
5. Grievance and Ombudsman details. An insurer’s reply to a grievance must include the Insurance Ombudsman’s contact details.

If the letter only says “not payable as per policy terms”, write back and ask for the specific clause, the evidence relied on, and confirmation that the decision was approved by the Claims Review Committee.

Can a rejected claim be reversed?

Yes, rejections are reversed when the clause cited doesn’t actually apply, the dates were counted wrongly, or the missing information is supplied. Common winning arguments are:

• The condition wasn’t pre-existing as defined. It wasn’t diagnosed or treated in the 36 months before the policy began, and the insurer has only assumed it was.
• Waiting periods were already served. Credit from continuous renewals and from porting counts. See the example below and portability.
• The moratorium applies. After 60 continuous months of cover, including ported and migrated years, the insurer can’t contest the claim for non-disclosure except for established fraud. See moratorium period.
• The exclusion isn’t in your policy. The September 2024 Master Circular bars further deductions in the name of exclusions that aren’t listed in the policy.
• Admission was medically necessary. A letter from the treating doctor explaining why outpatient treatment wasn’t possible can answer this.

Example: a waiting-period rejection that ignores porting credit

Example. You held a ₹3 lakh policy from 1 March 2023, renewed without a break, and ported to a new insurer on 1 March 2025, raising the sum insured to ₹5 lakh. On 10 October 2026 you have hernia surgery costing ₹3,60,000. The policy has a 24-month waiting period for hernia. The insurer rejects the whole claim, counting the waiting period from the porting date (only about 19 months earlier).

That’s wrong for the first ₹3 lakh. IRDAI’s 2024 Master Circular carries waiting-period credit across on porting, to the extent of the previous sum insured. For that ₹3 lakh, the 24 months ran from 1 March 2023 and ended on 1 March 2025, so by the surgery you had about 43 months of continuous cover. Only the extra ₹2 lakh starts a fresh 24 months, ending on 1 March 2027.

A well-documented appeal here could recover up to ₹3,00,000, subject to the policy’s other terms such as room rent limits and co-pay. The key evidence is copies of both policies showing continuous cover.

How to appeal: the escalation ladder and deadlines

Appeal to the insurer first; each later step needs the earlier one to have failed or stalled.

The Ombudsman’s award binds the insurer, which must comply within 30 days. If you aren’t satisfied with the award, the Council for Insurance Ombudsmen says you can still pursue your normal legal remedies.

What evidence helps your appeal

Evidence that answers the exact clause the insurer cited helps most. Gather:

• The full policy wording, schedule and Customer Information Sheet for the year of the claim.
• Every earlier policy, to prove continuous cover and waiting-period credit. If the rejection is about a pre-existing disease or waiting period, the Ombudsman asks for copies of all policies for the 48 months before the current one.
• A copy of your proposal form, to show what you were asked and what you declared.
• A certificate from the treating doctor on when the condition started and why admission was needed.
• Past medical records that show no earlier diagnosis or treatment, if non-disclosure is alleged.
• The discharge summary, bills, reports, and every email and letter exchanged with the insurer or TPA.

Appeal letter outline

Keep the appeal short, factual and tied to clauses. A simple structure:

1. Your name, contact details, policy number and claim number
2. Subject: request to review repudiation of claim number …
3. Facts: patient, hospital, admission and discharge dates, amount claimed, date of the rejection letter
4. The insurer’s reason and the clause it cited, quoted word for word
5. Why the clause doesn’t apply, one numbered point per reason
6. Documents enclosed, numbered
7. What you are asking for: the amount, and interest for delay where the rules provide it
8. A request for a written reply within the 14-day grievance timeline, noting that you will approach the Insurance Ombudsman if it isn’t resolved
9. Signature and date

What to check in your policy

1. The clause cited: find the exact clause or exclusion code in the wording and read its full text, including exceptions.
2. Customer Information Sheet, waiting-period block: the initial, specific-disease and pre-existing-disease waiting periods in days or months.
3. Definitions: search for “pre-existing disease”, “hospitalisation” and “medically necessary”.
4. Moratorium clause: search “moratorium” and “sixty months”.
5. Schedule: the date of first enrolment or “continuous coverage since”, which decides waiting-period credit.
6. Grievance redressal section: the grievance cell’s email, the Grievance Redressal Officer and the Ombudsman offices.

Where people get caught out

• Going straight to the Ombudsman. It can only hear your complaint after you have complained to the insurer in writing.
• Filing in a consumer commission first. Once the matter is before a court or commission, the Ombudsman route closes.
• Missing the one-year window. The Ombudsman can condone delay, but don’t rely on it.
• Not keeping old policy copies. Waiting-period and moratorium arguments depend on proving continuous cover.
• Not reading your own proposal form. If an agent filled it in, check what it says you declared before you argue non-disclosure.
• Accepting “presumed” pre-existing disease. Ask what record shows a diagnosis or treatment in the 36 months before the policy began.