How to smoothen the process of claiming insurance

Claim settlement in the insurance sector has two main aspects - the substance of the claim and the procedure of claim consideration and settlement. Now, an insurer's main considerations for determining the substance of a claim are:

>> Whether the insured has made a full and frank disclosure of material facts. If there is a non-disclosure or misrepresentation, it amounts to 'a breach of the duty of utmost good faith' and the insurer is entitled to avoid the policy as if it never existed. However, for life insurance policies, an insurer cannot avoid the policy for non-disclosure if two years have passed since policy issuance, unless the non-disclosure was fraudulent.

>> Whether the claim falls within the scope of the policy. This involves checking whether the event falls within the insuring clause and, if so, whether it is subject to any of the policy exclusions. It is for the insured to prove that the loss falls within the insuring clause and it is for the insurer to prove that any exclusion applies, subject to the parties agreeing otherwise in the policy.

>> Whether any conditions or warranties of the insurance contract have been breached. Usually, these conditions relate to the insured's conduct in making and pursuing the claim. The breach of these can affect the admissibility of the claim.

>> Whether the claim is in any respect tainted by fraud. Usually, if fraud is proved, then all the insured's benefits under the policy are forfeited. However, the insurer bears the onerous burden of proving the fraud.

An insurance claim is to be made in accordance with policy conditions, usually relating to the extent and quality of information provided to support the claim.

Where there are problems with the claim, the insurer can still decide to pay it on an ex gratia basis, that is, without reference to the insurer's legal liability or alternatively on a non-standard basis. While the former option is available for insurance, the latter is relevant to motor insurance cases. For instance, if a vehicle was loaded in violation of a weight restriction, the insurer can opt to pay up to 75% of admissible claim.

EXPERT TIPS: How to avoid rejection of insurance claim

In terms of the procedure, an insured is required to make a claim in accordance with policy conditions. Usually, these relate to the extent and quality of information that an insured must provide to support the claim and to help the insurer deal with the insured property and make investigations. An insured is privy to information about a claim and is therefore required to provide all cooperation to the insurer or surveyor.

In non-life insurance, an important functionary in claim procedures is a surveyor, appointed by the insurer to assess the loss. The insured is entitled to see a copy of the surveyor's report so that the basis of assessment is known to him.

Regulations require insurers to have an Integrated Grievance Management System in place for complaints. Policyholders may also approach the Irda's complaints cell or an insurance ombudsman who can adjudicate disputes of value up toRs 20 lakh. If the dispute between the insured and the insurer becomes contentious, the procedure for resolution is then governed by consumer courts or civil courts. If the policy contains an arbitration clause, the dispute can be resolved by an arbitrator.

TRINATH TADAKAMALLA,
Partner, Tuli and Co. Solicitors and Advocates