Why Health insurance Claims Are Rejected & How To Avoid It (2025 Update)

Health insurance should lead to peace of mind, but in India claim denials happen more often than one might expect. According to IRDAI’s Annual Report 2023-24, about 6–8% of health insurance claims are denied every year. That’s basically 1 in every 12 claims not getting paid to the policyholder. Here will dive deep into the topic ‘Why Health Insurance Claims Are Rejected & How To Avoid It (2025 Update)’.

If you understand why claims behaviours get rejected, you will be aware of the common pitfalls and save money, stressing the importance of your health policies when you require it the most.

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Common Reasons Why Health Insurance Claims Are Rejected

1. Non-Disclosure of Pre-Existing Diseases.

• Even if you had certain clinical conditions like, but not limited to, diabetes, hypertension, and asthma in existence prior to taking the policy, if you do not inform the insurer when applying for the policy, he is entitled to reject that claim.

• Example – In 2024, more than 22% of all claims denied were due to non-disclosure of pre-existing diseases (IRDAI claim data).

✅ Tip – **Provide your entire medical history, what’s the risk if your premium is marginally higher?**

2. Claiming during waiting periods

• Almost all health insurance policies have waiting periods for Pre-Existing Diseases of 2–4 years and 30-day periods for any illness (except for accidents).

• If you claim during these waiting periods your claim will be rejected.

✅ Tip – **Even before buying an health insurance policy check its waiting periods and consider a policy with waiting for Pre-Existing diseases**.

3. Lapsed Policy (Premium Not Paid on Time)

• Where a policy lapses owing to an unpaid premium, the insurer has no obligation to honour claims.

• Of all the claims rejected in 2023, about 9% were rejected because the policy was lapsed or inactive.

✅Tip: Set up an auto-debit for premiums; and remember renewal dates.

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4. Treatment not Covered in Policy

• Certain treatments by default are excluded (cosmetic surgery, dental, fertility, etc.) unless mentioned separately in the policy as covered.

• Room rent capping and sub-limits for treatments, (for example, ₹5,000/day for room rent) can also lead to partial claims being rejected.

✅Tip: Read all the fine print on exclusions, room rent, and disease specific sub-limits.

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5. Incomplete or Incorrect Documentation

• Missing hospital bills, discharge summary or incorrect details could result in a stall (or rejection) of a claim.

• Even minor errors between a name or dates could result in claims being rejected.

✅Tip: Organise all hospital records, prescriptions and bills; double-check all information on claims forms before submission.

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6. Cashless Claims for Non-Network Hospitals

• Cashless claims only work, if you are in one of the network hospitals of your insurer.

• If you go to a non-network hospital, the insurer may deny the cashless request (although reimbursement may still be possible).

✅Tip: Check if your hospital is in the network of your insurer before being admitted.

(10 essential tips to choose the best Health Insurance Policy)

Pertinent Numbers on Health Insurance Claim Rejections (India 2024–25)

• Total number of health insurance claims made ~1.4 crores (IRDAI) (IRDAI health insurance new rules 2025)

• Claims settled ~91-93%

• Claims rejected ~6-8% (≈ 8-10 lakhs claims in a year)

• Reasons for rejection of health insurance claims (IRDAI data):

• Non-disclosure of past & present blood relatives’ medical history  → 22%

• Policy lapse → 9%

• Not applying for coverage in the defined waiting period  → 14%

• Documentation related → 12%

• Other specific exclusions or sub-limits  → 43%

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How To Avoid Health Insurance Claim Rejection (2025 Guide)

1. Be honest in the proposal form (about health concerns, habits & previous claims).

2. Pay the premium on a timely manner — for example, do auto pay or put reminders to avoid missing premium payment deadlines.

3. Few exclusions & more clarity of sub-limits, covered & non-covered things.

4. Ensure you understand “waiting period” – don’t expect coverage from the date of issuance of policy for pre-existing diseases (PEDs).

5. Proper documentation – make sure you keep both physical and digital copies of all reports, bills and prescriptions.

6. Use network hospitals for the cashless access treatment.

7. Inform insurer for any reason as early as you can – if it is a planned hospitalization, always take the pre-authorization from the insurer.

Comparison of Claim Settlement Ratios: Why Health Insurance Claims Are Rejected More With Some Insurers

Some Top Performers

Here are specific insurers who are among the best based on the latest data:

(Compare Health Policies for Senior Citizens Plans in India 2025)

Insights on Why Health Insurance Claims Are Rejected in India

     •    Incurred Claim Ratio (ICR): This is the amount of the collected premium that gets paid out in claims. A very high ICR (particularly a value greater than 100%) means that the insurance company has a low profit margin, but it is good news for policy holders in terms of that insurance company being generous.

     •    CSR (Claim Settlement Ratio): This is sometimes reported as a % of the number of claims settled. If the CSR is low that implies that many claims have been rejected or are pending..

     •     Standalone Health Insurers have much lower averages for both ICR, CSR – so they may have stricter inclusion criteria, more rejections or more delays.

     •    Public vs Private – there is a difference – the Public Sector firms have recently been producing higher averages in this metric.

Conclusion: Why Health Insurance Claims Are Rejected & How To Avoid It

Health insurance has value but a rejected claim can wipe out your savings. As in India about 6-8% of claims are rejected per year, knowing the rules is paramount . The good news is you can get to a place of very low risk of rejection by following the rules related to giving your health history, paying premiums on time, picking the right policy, keeping paperwork ready and so on.

👉 Probably best to think of health insurance as a contract, if you follow the rules pretty closely you will almost guaranteed to be paid out for what you need it.

(Proven Tips to save money on all types of Insurances- Best Insurance Hacks)

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