How insurance disputes are decided

Insurance contracts are governed by the Insurance Act, 1938, the IRDAI Act, 1999, and the specific contract (policy schedule + general/special conditions). Disputes over claim repudiation are typically pursued before (i) the IRDAI Integrated Grievance Management System; (ii) the Insurance Ombudsman under the Insurance Ombudsman Rules, 2017 for claims up to ₹50 lakh; or (iii) the Consumer Commission under the CPA, 2019 (no upper monetary cap).

Mediclaim repudiations — the most common dispute

Insurers frequently invoke (a) pre-existing disease exclusion, (b) waiting period not over, (c) treatment not warranted, (d) non-disclosure of material facts in proposal, (e) treatment in non-network hospital. The Supreme Court in Manmohan Nanda v. United India Insurance (2022) 4 SCC 582 and Reliance Life Insurance v. Rekhaben Nareshbhai Rathod (2019) clarified that non-disclosure must be of material fact known to the proposer; honest omissions do not justify repudiation.

Motor insurance — own damage and third party

Own-damage claim disputes (denial, depreciation, non-coverage) are pursued at the Consumer Commission or the Ombudsman. Third-party death/injury claims go to the Motor Accident Claims Tribunal (MACT) at Kota under Section 165 of the Motor Vehicles Act, 1988. No-fault compensation under Section 161 (earlier Section 140) and structured-formula multiplier method under Sarla Verma v. DTC (2009) 6 SCC 121 govern compensation.

Life insurance claim rejection

Common grounds: suicide within 1 year; non-disclosure of medical history; misrepresentation in proposal. Indian law is strict on insurer’s duty of utmost good faith — but it cuts both ways under Section 45 of the Insurance Act. After 3 years from issuance / revival, the insurer cannot question the policy on any ground including fraud — this is the famous “3-year clause” that has saved many beneficiaries.

Strategic forum choice

Insurance Ombudsman — fast, no fee, award binding on insurer, but limited to ₹50 lakh and only for individual policyholders (not corporate). Consumer Commission — broader jurisdiction, can award compensation for mental harassment, interest at 9–12%, and litigation costs. For complex high-value cases or where injunction is needed, civil suit before the District Court is the route.