Insurance companies can’t time bar health claims: Bombay HC
Mumbai: The Bombay High Court has clarified that an insurance company cannot reject hospitalisation expense claims merely because the time limit specified in the policy for filing the claim expires. A division bench comprising Justices Bharati Dangre and Manjusha Deshpande, in its order of April 20, directed the insurance company to reimburse the amount under the policy within eight weeks from the date of passing the order, along with annual interest at 6% from the time it became due and payable.
The court was hearing a petition filed by CP Ravindranath Menon, who sought reimbursement from United India Insurance Company under a group health policy obtained through his employer, Export-Import Bank of India. The policy was valid from April 1, 2021, until midnight of March 31, 2022.
On May 24, 2022, the claimant submitted several reimbursement claims for medical expenses incurred between April 8, 2021 and April 19, 2022. The insurance company rejected the claim of ₹1.13 lakh, stating that it was time-barred. It argued that the policy required claims to be filed within a prescribed 90-day period.
The insurance company, through its counsel, argued that since it is a contract between the parties, and the petitioner agreed to all the stipulations therein, which clearly stated that bills more than 90 days' old will not be paid/reimbursed, he is bound by the same, and since the reimbursement is claimed beyond the said period, the insurance company has rightly refused the claim.
However, the court, while rejecting this argument, said, "…in our view, such an inhibition in an insurance policy restricting the period of availing the benefit under the policy, which the insured is otherwise entitled to avail, cannot be sustained and has to be declared void and non-est."
The order is expected to provide clarity and relief to several policyholders, say legal experts.
Himanshu Vidhani, partner at law firm Quadra Legal, said by holding that contractual time-bar clauses in insurance policies are void under Section 28(b) of the Indian Contract Act, the court has effectively disabled insurers from rejecting legitimate claims on the mere procedural ground of delay. "This ruling will apply with equal force to all group and individual health policies, and insurers will need to revisit their standard rejection templates," he added.
Sarvaank Associates managing partner Ankita Singh said this order is a game-changer for the insurance sector. "It (the order) clarifies that companies cannot hide behind 'procedural' time limits to reject valid claims. The court prioritises the insured's substantive right to protection over arbitrary administrative deadlines, following established Supreme Court precedents."
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