General information for a grievance, not legal advice.
Life insurance death claim (Section 45, Insurance Act 1938)
- Three-year incontestability: once a life policy has run for three years — counted from the latest of its issuance, the commencement of risk, its revival, or a rider — it cannot be called in question on any ground whatsoever, including fraud. A recent revival restarts a fresh three-year clock.
- Within three years: the insurer may repudiate, but it must communicate its grounds and the supporting material in writing. For a non-fraud misstatement the onus is on the insurer to prove the fact was material — that it would not have issued the policy had it known. For fraud it must prove a deliberate intent to deceive; mere silence is not fraud.
- Premium refund: if the repudiation is for a non-fraud misstatement, the insurer must refund all premiums paid, within 90 days.
- Suicide: within the first 12 months from commencement of risk or from revival, the nominee still receives at least 80% of the total premiums paid to the date of death, OR the surrender value available on that date — whichever is HIGHER — provided the policy is in force. Quote "whichever is higher"; it is part of the rule and it is often the larger figure. For a ULIP the benefit is the fund value as available on the date of intimation of death, and any charges other than fund management and guarantee charges recovered after the date of death must be added back. After 12 months, suicide is covered. (Note for editors: this rule originated in the IRDAI (Non-Linked Insurance Products) Regulations 2019 and the ULIP Regulations 2019, BOTH REPEALED by reg. 9 of the IRDAI (Insurance Products) Regulations 2024. Reg. 9(2) moves such provisions into circulars, so cite the current Life Products master circular — never the 2019 regulations — when a citation is needed.)
- Grace period: death within the grace period (15 days monthly / 30 days other modes) is a payable claim — the policy was in force.
- Nominee: a parent, spouse, or child nominee is a beneficial nominee (Section 39(7)) and keeps the money.
Motor own-damage claim (causal-nexus principle)
- A claim cannot be repudiated in full for a breach that is not germane to the loss. Where a use-class technicality, licence irregularity, or intimation delay had no causal connection to how the damage occurred, the insurer must settle rather than reject outright. That principle rests on settled Supreme Court authority (National Insurance v. Nitin Khandelwal; Amalendu Sahoo v. Oriental Insurance; Jitendra Kumar v. Oriental Insurance). The "non-standard" percentage does not: it comes from the insurers' own guideline, "pay upto 75% of admissible claim" — a ceiling, not a rate. The Supreme Court has never fixed the figure, and where the breach is wholly unconnected to the loss (a theft, a parked vehicle) the claimant's argument is for the claim in full.
- Delay: mere delay in intimation cannot deny a genuine, FIR-supported claim (Gurshinder Singh v. Shriram), and the 2024 Master Circular on Protection of Policyholders' Interests says outright that no claim shall be rejected or closed for delayed intimation.
- Drunk driving: *IFFCO Tokio v. Pearl Beverages* (2021) cuts BOTH ways and must be quoted whole. The burden is on the insurer, and mere consumption is not enough — what must be shown is that the driver's faculties were disturbed so that driving was impaired, NOT the 30mg/100ml threshold of s.185 of the Motor Vehicles Act. But the Court also held that no breath-analyser or blood test is essential: circumstances associated with the effects of alcohol can prove it. Do not tell a claimant the absence of a test is decisive.
- Depreciation: partial-loss claims apply a standard depreciation schedule to replaced parts (50% on rubber/plastic, nil on glass, rising by vehicle age); a zero-depreciation add-on removes it. A total loss is paid at the Insured's Declared Value less the wreck.
- Engine water damage (hydrostatic lock): a grey area — insurers often deny flood engine damage on a base OD policy as consequential loss, so cover is commonly disputed; not restarting the engine strengthens a "direct accidental damage" argument but does not guarantee it. The reliable route is an engine-protection add-on, which expressly covers water-ingress / hydrostatic-lock damage (with its own exclusion for continuing to drive or restart after ingress).
- Surveyor's report: important but not conclusive or binding on either side — *New India Assurance Co. Ltd. v. Pradeep Kumar* (Civil Appeal No. 3253 of 2002): the report "is not the last and final word... not that sacrosanct that it cannot be departed from; it is not conclusive", re-affirmed in *New India Assurance v. Mudit Roadways* (Civil Appeal No. 339 of 2023). Section 64UM does NOT help the policyholder here — its proviso expressly preserves the insurer's right to settle at an amount different from the surveyor's, with no requirement to record reasons. On a REPEAT survey, *New India Assurance v. Luxra Enterprises* (2019) holds the insurer "cannot appoint a second surveyor just as a matter of course" and must give cogent reasons. Put an independent estimate against the report; that is what the forum weighs.
Where to escalate
Both life and motor rejections follow the same ladder — insurer's Grievance Redressal Officer → IRDAI / Bima Bharosa → Insurance Ombudsman (free, binding, awards up to ₹50 lakh — a figure that caps the award AND is applied to the claim value at filing, so take a larger dispute to the consumer commission; Rule 13(1)(b) covers partial or total repudiation by life, general, and health insurers).
Source: Insurance Act 1938 (ss.45, 39, as substituted by the Insurance Laws (Amendment) Act 2015); IRDAI Master Circular on Protection of Policyholders' Interests, 2024; named Supreme Court judgments. Last reviewed 2026-09-13.