• Devesh Saxena

What are Various Legal Remedies and Forums available to File an Insurance Claim?

In a world full of uncertainty and contingency, insurance has become a necessity for people. Insurance is a legal agreement between two parties i.e., the Insurance Company (insurer) and the Individual (insured) where the Insurance Company promises to make good the losses of the insured on happening of the insured contingency. The contingency or eventuality is the affair that begets deprivation. The policy bearer or insured renders a premium in exchange for the vow made by the insurer. An insurance claim is a formal entreaty to an insurer (insurance company) asking for reimbursement of the amount grounded on the facts and principles of the insurance policy. There are provisions manifested in the insurance policy itself when an individual can claim reimbursement or compensation. In a nutshell, you can only claim something that is caused by one of the named perils listed in your policy. It can be asserted that the insurance policy succors you with monetary aid when your goods and chattels get vandalized, or you get injured.[1] There are various legal remedies available for the insured to choose from in case one finds it difficult to receive their insurance claim from the insurer. The question which often perplexes a common man is that out of all of the multiple foras which forum is best suited to file an insurance claim? At times the insurance company might reject the claim or might play mischief in reimbursing the due amount to the insured or to his/her dependents, then such a situation necessitates taking proper and efficient legal recourse. In this article, we will be throwing light at some of the most efficient legal remedies which can be availed by an Insured against an Insurance Company.

General Process of Filing an Insurance Claim with the Insurance Company:

Claiming insurance can be an intricate and somewhat dubious procedure as well. There is no one-size-fits-all upshot, and how your insurance claim is dealt with rests on the fine print in your policy. The general procedure for filing the claim is as follows[2]:

  1. Raise a Claim at the earliest or with such extended time as is permissible with the policy.

  2. The Insurance Company must be notified of such damage as covered within the insurance policy.

  3. On receipt of such conveyance, an insurer shall revert immediately and provide a comprehensible demonstration of the procedural provisions of their policy that you should follow. In the affairs, where the surveyor has to be appointed for evaluating the destruction/claim, it shall be accomplished within 72 hours of the receipt of intimation.

  4. The appointed surveyor shall evaluate your claim where you shall be required to furnish all the particulars required by the surveyor. Non-furnishing of particulars or non-cooperation of any kind may cause delay in the assessment of the claim.

  5. Claims Adjudication Report or Survey Report would be prepared based on the assessment submitted by the surveyor.

  6. On the receipt of a Survey Report prepared by the surveyor, the insurer shall within the period of 30 days make an offer for settlement of claim. If the insurance company for any reason rejects a claim under the policy, it shall do within 30 days from the receipt of the survey report.

  7. Once such offer for settlement of claim is accepted, the payment of the due amount shall be made within 7 days from the date of acceptance of the offer. In case of delay, the insurer is liable to pay interest at a rate that is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.

Legal Remedies Available if an Insurer Denies or Rebuts your Claim, or You've not Contended with an Offer of Settlement of Claim:

When the above general process doesn't work out and the claim raised by you is rejected or such offer for settlement made by the insurer is not accepted by you, then you may opt for further legal remedies in order to seek what's rightfully yours, however, it is important to choose the correct forum, best suited to your needs, in order to make an insurance claim.

All the legal remedies have been discussed in detail below:

1. IRDA: Trouble-Free Route to Lodge a Complaint:

IRDA or the Insurance Regulatory and Development Authority is the essential legal body that manages and controls the insurance department in India, made by the IRDA Act. IRDA intends to advance and secure the interest of policyholders in India and guarantees quick redressal of protection claims avoidance of misrepresentation and misbehavior by insurance agencies. Addressing and solving the disputes between various entities related to insurance is one of the functions of IRDA. The Integrated Grievance Management System (IGMS) was introduced by the IRDA to file a complaint against the insurance company online. An insurance advocate in India can file a complaint online on behalf of the policyholder and a unique complaint ID is issued to the department in question for dispute resolution. This process is more of a direction to insurance companies for reimbursing the claim in 15 days. If the insured is discontented, he/she can exhaust other available legal remedies. Recently, IRDA has issued Guidelines for Health Insurance, 2020 focusing on the aspects related to claim settlement. Following are certain new rules as per the recent guidelines:

  • Decision On A Claim Within 30 Days: According to the new guidelines, insurance companies will be required to either settle or reject a claim in not more than 30 days from the date of its receipt, under certain conditions.

  • Any Delay Means Interest: In case an insurer fails to decide on a claim within this period, it will be required to pay interest at a rate of 2 percent above the applicable bank rate on the dues to the policyholder. This means if your claim gets delayed, your insurance company will also have to pay an additional amount, over and above the claim amount.

  • No Rejection After 8 Years: A health insurance company cannot reject a claim if the policy is renewed without a break for 8 years by the policyholder. The 8-year period will be called the moratorium period. The insurance company cannot appeal to the IRDA against the settlement of such claim except for fraud and/or a claim raised against the exclusion of the policy after the moratorium period. The insurance company cannot reject a claim on the basis of misrepresentation or non-disclosure. IRDAI has given a period of 8 years to the insurance company for verifying the information provided by the policyholder and thus, a claim cannot be rejected on those grounds.

  • Which insurers will the new rules be applicable to?: The new guidelines, issued in June, 2020 by IRDAI, will apply to all general and health insurance policies that will come into effect from October 01, 2020, and also to those existing health insurance policies which were renewed before April 01, 2021.

2. Civil Courts:

The broad ascending hierarchy of the civil courts comprises roughly 600 district courts, 25 high courts, and the Supreme Court of India, which is the highest court of law in India. Four of the 25 high courts – Delhi, Mumbai, Chennai, and Kolkata – have original jurisdiction to hear matters over a certain pecuniary value, so the civil courts and judges under them do not hear matters involving values higher than that limit. In all other cases, district courts and the competent courts of the first instance have an unlimited pecuniary jurisdiction to hear any insurance dispute. The civil courts take around two-three years to resolve the dispute

3. Commercial Courts:

Commercial Courts were established under the Commercial Courts Act, 2015, with an aim to ensure speedy disposal of high stake commercial matters. The Act had limited the specific value of the suit to not less than Rupees Three Lakhs[3]. Wherein, the commercial courts were established at all the District levels, however, there were no commercial courts established at the District level where the High court had original civil jurisdiction such as Delhi, Mumbai, Madras, Kolkata, and Himachal Pradesh. Under Section 2(c) of the Commercial Courts Act, 2015, a claim for "Insurance and Re-insurance" has been recognized as "Commercial Dispute".

Advantages of filing a claim before Commercial Courts are as follows:

  • The Commercial Court Act provides for expeditious disposal of the suit.

  • The Act provides for imposing Costs, which ensures that the suit is decided faster and avoids lack of due diligence.

  • Summary judgment, Pre institution mediation, Case management hearing are aids to speedy trial of the suit.

  • The Act provides for a systematic way of leading the case.

  • There is less scope for taking unnecessary adjournments and thereby judicious use of the court time.

4. Consumer Courts:

The consumer courts follow a three-tier hierarchy. In ascending order, these are the District Consumer Disputes Redressal Commissions (DCDRC), the State Consumer Disputes Redressal Commissions (SCDRC), and the National Consumer Disputes Redressal Commission (NCDRC). The insured according to the Consumer Protection Act is contemplated as a "consumer". According to the new Consumer Protection Act, 2019, all the above commissions have their pecuniary jurisdiction above which they cannot hear complaints. Consumer complaints can be filed with respect to the claim value enumerated as below:

DCDRC – up to 1 crore; SCDRC – 1 crore to 10 crores; and NCDRC – more than 10 crores

The award pronounced by the NCDRC can be challenged before the Supreme Court. The procedure to file a complaint under the new Consumer Protection Act, 2019 can be read here.

5. Insurance Ombudsman:

As a mechanism of Alternative Dispute Redressal, the insured can likewise move towards the Insurance Ombudsman for disputes that do not exceed Rupees 20 Lakhs. The Insurance Ombudsman is certifiably not a legal position and doesn't have the ability to authorize its rulings against the insured. The Ombudsman is supposed to provide an award to the insured within three months of the receipt of the complaint. If the claimant a complainant isn't happy with the Award of protection of the Ombudsman, he can practice his entitlement to take a plan of action to the typical course of law against the insurance agency. However, the award of the Insurance Ombudsman shall be binding on the insurers.

Limitation Period for Filing an Insurance Claim:

The way of evaluating the limitation period for insurance claims is given under Article 44(b) of the Limitation Act 1963, which expresses that time is to be determined from 'the date of the event causing the misfortune, or where the case on the arrangement is denied either part of the way or completely, the date of such rebuttal'. The recommended limitation period for filing a case in the civil court or mediation is three years, while the limited time frame for documenting a case in the consumer court is two years.


[1] “Insurance Claim” by Adam Hayes under the head 'What is an insurance claim?' available at: https://www.investopedia.com/terms/i/insurance_claim.asp

[2] “How to Lodge a Claim” available at: https://nationalinsurance.nic.co.in/en/how-lodge-claim

[3] Section 2(i) of Commercial Courts Act, 2015.


Research Work: Prachi Tripathi, Intern at S&D Legal Associates.