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What is the difference between claim repudiation & claim rejection?

Have you ever come across the term “claim repudiation” and wondered what it meant? Is claim repudiation the same as claim rejection?

Let us briefly discuss the meaning of claim repudiation, and the difference between repudiation and rejection.

Meaning of claim repudiation

An insurance claim is said to be repudiated by the insurance company if the insurance policy does not provide any provision for disbursement of the claim for a particular condition or cause.

In simple terms, the cause that the claimant mentioned within his claim application is not a valid cause, and the insurance company does not consider it, thereby repudiating the claim.

Example of claim repudiation

Let us assume that Mr. Joseph has bought a motor insurance policy. A few years later, he meets with an accident while being under the influence of alcohol. 

The motor insurance company will immediately repudiate his claim as it was clearly mentioned that no claims will be entertained if the policyholder meets with an accident under the influence of alcohol.

Thus the claim will not even be considered, and will be repudiated at once due to violation of policy terms.

Meaning of claim rejection

A claim rejection is when the cause of loss is valid, but the claim is rejected based on other factors. Common factors that lead to rejection are:

  • Falsifications by claimant
  • Improper documentation
  • Violation of company policy
  • Intentional mischief
  • Incomplete documentation
  • Delay in claim application

As mentioned in the article, there is a fine difference between claim rejection and claim repudiation. The general public should be aware of these finer differences, and always ensure that they go through the policy bond thoroughly with a fine-tooth comb at least once. 

Also, please ask your insurance agent in case there are any doubts that are raised due to insurance lingo. It is their responsibility to clear all policy related doubts.

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Frequently asked questions about claim repudiation

  • Can a policyholder appeal a rejected claim?

    Yes, a policyholder can approach The Insurance Ombudsman Office and lodge an appeal. 

  • What are some of the major reasons why an insurance claim is rejected?
    • Intentional mischief
    • Falsification by claimant
    • Violation of company policy
    • Incomplete documentation
    • Delay in claim application
    • Improper documentation
  • Can an insurance company reject or repudiate a claim after 3 years?

    No, an insurance company cannot reject or repudiate a claim once the insurance policy is 3 years old.