Consumer Court Asks Star Health To Pay Full Claim After Insurer Cleared Only Part Of Hospital Bill

A consumer court in Chandigarh has ruled against Star Health Insurance in a dispute over a reduced health insurance payout, directing the insurer to release the remaining amount of a medical claim after finding fault with how the settlement was handled, according to a recent report by The Economic Times.

The case involved a policyholder whose medical claim of Rs 2.25 lakh was settled by the insurer for just Rs 69,958. The consumer forum said the insurer had failed to explain why most of the claim was cut and held it responsible for short-settling the policyholder. The claim related to bariatric surgery done in July 2022 and was settled only in part.

Unhappy with the outcome, the policyholder approached the consumer court, arguing that the insurer had relied on exclusions that were never clearly conveyed while selling the policy. He contended that the deductions came as a surprise and that no prior explanation had been given about such limitations applying to the procedure.

Court Finds Fault With Claim Handling

During the proceedings, Star Health maintained that the claim had been settled as per policy conditions. The consumer commission, however, observed that the insurer had not produced any material to show that the policyholder had been properly informed about the exclusions used to reduce the claim amount.

The forum noted that insurers cannot fall back on policy clauses at the time of settlement unless they are able to show that such conditions were clearly communicated and accepted by the insured at the time of purchase. In the absence of this, reducing a valid claim was held to be unjustified.

The commission also remarked that health insurance contracts place an obligation on insurers to act transparently. If policy wording or coverage limitations are not explained in a manner the consumer can reasonably understand, the benefit of doubt must go to the policyholder.

The commission ordered Star Health to release the unpaid amount of Rs 1,55,042. It also awarded interest from the date the complaint was filed and costs to the complainant. A deadline was set for complying with the order.

What Policyholders Should Note

The ruling comes at a time when complaints over partial health insurance settlements are becoming more frequent. Many policyholders discover exclusions or sub-limits only after a claim is processed, often when the hospital bill has already been paid.

Consumer courts have repeatedly taken the view that insurers must do more than simply issue policy documents. They are expected to ensure that buyers are aware of key conditions that could materially affect claim payouts.

The ruling adds to earlier consumer forum orders that have questioned claim reductions linked to unclear policy conditions.