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Life Insurance - Ways to claim insurance when disaster strikes

22 Jul 2013

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Claiming for damages to goods or vehicles is easier, life claims take longer

The number of people missing and dead in the Uttarakhand tragedy can be far more than the government estimates, with many swept away by the flash floods or buried under the rubble. To make insurance claims easy, Finance Minister P Chidambaram recently asked Life Insurance Corporation (LIC) not to insist on the usual conditions to service the claims. The public sector insurer was asked to get an indemnity bond from the claimants in such cases and settle it. The minister also asked LIC to constitute a team to settle the claims of those affected on a centralised basis.

Bajaj Allianz Life Insurance also relaxed its claim settlement norms for Uttarakhand victims by waiving documentation and investigations. The insurer will settle claims on confirmation of death by a local authority/Uttarakhand government/the Armed Forces, in 72 hours. "Apart from government confirmation, the company will require photograph of the deceased and KYC (know your customer) of the nominee/legal heir," it said. Other insurers are also likely to take a compassionate view. However, it might not always be easy to get claims settled. Insurers point out they have to settle claims worth crores of rupees. To ensure the right person gets the money, insurers argue they need to be stringent to an extent, even in such circumstances also. Let’s take a look at the difficulties one can face while claiming insurance in such situations:

Life insurance

Here, the biggest issue is claim settlement of those who’ve gone missing without trace. In the absence of physical proof of death, claim settlement can take years. Says Balram Sarma, chief (operations) at Future Generali Life Insurance: "Normally, an insurer would wait for seven years, as per law, to assume a person is dead. In times of a natural disaster, it can bring down the time, depending upon its exposure. For our company, the decision has been taken to wait for six months from the date of disaster." After seven years, the nominee or legal heir of the missing person has to send a few documents for claim settlement - a copy of the first information report (FIR) filed with the police on the day the insured went missing, a non-traceable report issued by police later and a court order presuming the missing person is dead. This needs to be accompanied by policy-related documents. The finance ministry has asked LIC not to stick to the seven-year clause this time. Of course, this needs to be backed by the Uttarakhand government declaring those missing as ’presumed dead’.

Typically, once the government announces a person as ’presumed dead’, insurers can give the usual claim procedure a miss and settle claims much faster. However, Yateesh Srivastava, chief operating officer of AEGON Religare Life Insurance, says, "The payment of claim is not dependent or linked to a body being found. At the same time, once there is an official announcement of death, the official announcement needs to be attached with the intimated claim for settlement." Normally, a death certificate from the municipal authorities is required. However, for victims of a widespread tragedy, a list issued by a hospital, police or armed forces also helps. "In a natural disaster, insurers can, in lieu of a policy document, ask for an indemnity bond stating the insurer is not liable for any amount occurring due to assignment/loan/third-party of policy which is not registered with it," adds Sarma.

Health insurance

Survivors of the aftermath will need medical attention. In such situations, medical assistance is mostly funded by the government. However, one can never be sure when the government assistance will reach. Therefore, it is better to own and claim from your own cover. Even if you get treated in a non-network hospital, you can always get reimbursement for the expense. Though insurers are lenient towards those who’ve lost policy documents, they advise remembering policy number. It is especially beneficial in such situations as processing claims becomes easy. Otherwise, many insurers say, basic verification of the insured (like identify proof) is done before processing the claim. The claims procedure is the same way as it would be otherwise. That is, the policyholder pays the bill and then claims for reimbursement of as much as the sum insured. Original medical bills are required to be reimbursed. To claim against a personal accident policy, a claimant will need a government-issued death certificate for verification.

Home and motor insurance

Claims against property, motor, home and personal accident claims form the major chunk in a widespread devastation. Here, the claim procedure becomes very difficult because policy documents would mostly be missing, mostly. Then, claims can be entertained if the losses can be substantiated with the help of duplicate documents such as title deeds, RC copy and so on, says Ramesh Ramani, senior vice-president (consumer lines) at Tata AIG General Insurance. HDFC Ergo has appointed agencies to get missing documents from regional transport offices concerned, says a spokesperson. For claims against home insurance, surveyors mostly rely on other documentary evidence of existence or ownership, such as the sale deed of the property or physical evidence at the scene to assess the loss, say insurers.

According to experts, it is better if your vehicles or property get washed away because insurers pay very little for damaged vehicle/property, considered to be a ’partial loss’, and you have to spend extra from your pocket to complete the repair. "Such losses (vehicle or property getting washed away) are common and are paid on a total loss basis," says the HDFC Ergo spokesperson. Cases where the house or vehicle has been completely washed away is categorised under ’complete loss’ and the full sum insured is payable. Otherwise, surveyors will put the case under partial loss. Ramani says the claim should be notified to the insurance company as soon as possible - by phone, text message, online.

"While the insurance company commences the process of verifying the loss, the insured must assist in collating whatever relevant documents such as proof of ownership, list of things that have been damaged or lost, and so on. If a vehicle has been submerged in water, no attempt must be made to restart it, but, if possible, interiors must be cleaned of any sludge or muddy water. Small steps taken by the insured in minimising the loss can go a long way in ensuring a speedy and hassle-free claim settlement."