NISM-Series-X-B: Investment Adviser (Level 2) · Non-Life Insurance Products

Claims Process and Policy Selection Considerations in Non-Life Insurance

Updated 11 October 2026 · Fact-checked

The claims process is the sequence of steps from telling the insurer about a loss to receiving payment: intimation, documentation, survey or verification, settlement, and grievance redressal if you disagree. Policy selection means matching cover, sum insured, exclusions, insurer service and cost to the client's real needs. Exam questions test the order, the choice and the trap.

Understand Claims Process and Policy Selection Considerations

A non-life policy is only useful if the claim is paid. So an adviser must understand both how a claim works and how to choose a policy that will actually respond when the loss occurs.

The claim starts with intimation: the policyholder informs the insurer or its TPA (third party administrator) about the loss. Policies ask for prompt notice. Late notice is a common reason for disputes. Insurers can condone a delay if the reason is genuine, but you should never assume this. For theft, fire or a third-party injury, police or fire brigade reports are usually needed as well.

Next comes documentation: the claim form, the policy copy, identity proof and loss-specific papers. For health, these are bills, discharge summary and investigation reports. For motor, they are the driving licence, registration certificate and repair estimate. For property, they are photographs, an inventory of damaged items and a report on the cause. For larger losses, the insurer appoints a surveyor or loss assessor to inspect the loss and estimate the amount payable. The insurer then decides on the claim and settles it, or repudiates it with written reasons.

In health insurance there are two modes. In cashless, the insurer settles the eligible bill directly with a network hospital, usually after pre-authorisation. In reimbursement, the insured pays the hospital and then claims the money back with original documents. Reimbursement is the only route at a non-network hospital. It is also the fallback if cashless is refused. A cashless refusal does not mean the claim itself is rejected.

If the client is unhappy, the usual path is: complaint to the insurer's grievance officer first, then escalation within the insurer, then the IRDAI grievance channel (Bima Bharosa), and then the Insurance Ombudsman for disputes within the ombudsman's limits. Consumer forums and courts remain available as well. Check the current monetary limit and time rules in your workbook rather than relying on memory.

While recommending a product, an adviser weighs the client's needs, the sum insured, exclusions, waiting periods, sub-limits, co-payment, deductibles, the insurer's claim settlement record, network size, premium affordability and renewability. The cheapest premium is rarely the best choice. Suitability and clear disclosure matter more.

Key formulas to remember

Claim sequence: Intimation → Documents → Survey/Verification → Decision → Settlement (or repudiation) → Grievance; Use this order to eliminate options that put settlement before intimation or survey.
Cashless vs reimbursement: Cashless: insurer pays network hospital. Reimbursement: insured pays first, insurer repays later; Reimbursement is the only route at a non-network hospital.
Claim payable with deductible and co-pay: Payable = (Admissible loss − Deductible) × (1 − Co-pay %), capped at the sum insured; Check the policy wording for the exact order in which the terms apply. This is a common model for exam arithmetic.
Grievance escalation: Insurer's grievance officer → insurer's senior level → IRDAI grievance channel → Insurance Ombudsman → consumer forum or court; Go to the insurer first. Legal forums remain open as well.
Policy selection checklist: Need → Sum insured → Exclusions and waiting periods → Sub-limits and co-pay → Insurer service → Premium; Premium is the last factor, not the first.

How to solve Claims Process and Policy Selection Considerations questions

Use the same short method for any claims or selection question.

1Identify whether the question is about a claim stage, the cashless or reimbursement mode, grievance redressal or recommending a product.
2For a claim question, place the event in the sequence: intimation, documents, survey, decision, settlement.
3Check the policy conditions in the stem: network hospital, waiting period, sub-limit, deductible, co-pay, exclusions.
4For arithmetic, apply the deductible first, then the co-pay, then the cap at the sum insured, unless the stem states a different order.
5For grievance questions, pick the lowest forum that is still unused: the insurer first, then IRDAI or the ombudsman.
6For selection questions, choose the option that matches the client's need and discloses limits, not the one with the lowest premium.
7Re-read the question for words like 'first', 'most appropriate' and 'not' before marking.

Quickest way: Stage-and-trap scan

When to use it: Use this when you have under a minute per MCQ and the options look similar.

Underline the stage or the client need in the question.
Cross out options that break the claim order or skip the insurer-first grievance step.
Cross out options that call a cashless refusal a claim rejection.
For selection, cross out options that pick on premium alone or ignore exclusions.
For arithmetic, do deductible, then co-pay, then cap, and match your number to the options.

Common mistakes in Claims Process and Policy Selection Considerations

Treating a refused cashless request as a rejected claim.
Students merge the mode of payment with the claim decision.
Fix: Remember that the insured can pay and file a reimbursement claim with documents. The claim is decided separately.
Going straight to the Insurance Ombudsman.
The ombudsman is the best-known grievance body.
Fix: Start with the insurer's grievance officer. Use the ombudsman after that, subject to the limits in your workbook.
Applying the co-pay before the deductible in arithmetic.
Students process the terms in the order they appear in the policy.
Fix: Follow the stem. If it is silent, subtract the deductible first, then apply the co-pay, then check the sum insured cap.
Recommending the policy with the lowest premium.
Price is easy to compare and clients ask for it.
Fix: Compare exclusions, waiting periods, sub-limits, network and claim service. Record why the product is suitable.
Assuming late intimation always kills a claim.
Students over-read the prompt notice condition.
Fix: Say that delay can cause a dispute and that insurers may consider genuine reasons. Never advise a client to delay.
Ignoring the surveyor stage in non-health claims.
Health claims dominate study material.
Fix: For motor, property and fire losses, include survey and loss assessment before settlement.

Worked examples

Example 1

A client's hospital bill is ₹1,20,000, all admissible. The policy has a sum insured of ₹5,00,000, a deductible of ₹20,000 and a 10% co-payment applied after the deductible. How much does the insurer pay?

Show the solution

Admissible loss = ₹1,20,000.
Subtract the deductible: ₹1,20,000 − ₹20,000 = ₹1,00,000.
Apply the 10% co-pay: the insurer pays 90% of ₹1,00,000 = ₹90,000.
Check the cap: ₹90,000 is below the sum insured of ₹5,00,000, so no reduction applies.

Answer: The insurer pays ₹90,000. The client bears ₹30,000.

Example 2

A client was admitted to a non-network hospital in an emergency. The client paid the bill and is unhappy that the insurer has delayed settlement without reasons. Which is the most appropriate course of action for the adviser to suggest?

Show the solution

A non-network hospital rules out cashless, so the client uses reimbursement. Documents were presumably already filed.
The complaint is about delay, so the first step is the insurer's grievance officer.
Escalate to the IRDAI grievance channel or the Insurance Ombudsman only if the insurer's response is missing or unsatisfactory, subject to the limits in the workbook.
Consumer forums remain available later.

Answer: Raise a written complaint with the insurer's grievance officer first, then escalate to the IRDAI channel or the Insurance Ombudsman if unresolved.

Exam tips

Questions often ask for the first step. For grievances this is the insurer. For claims it is intimation.
Learn the difference between cashless refusal and claim repudiation. It is a favourite trap.
In arithmetic, write deductible, co-pay and cap as three lines. Do not do it in your head.
For selection questions, prefer answers that mention suitability, disclosure of exclusions and documentation.
Check monetary and time limits for the ombudsman in the current workbook. Do not guess them.

Practice questions from Non-Life Insurance Products

Claims Process and Policy Selection Considerations: frequently asked questions

What is the difference between cashless and reimbursement claims?

In a cashless claim, the insurer or TPA pays the network hospital directly, usually after pre-authorisation. In reimbursement, you pay first and claim the eligible amount back with original documents. Reimbursement is the only route at non-network hospitals.

What are the steps in a general insurance claim?

You intimate the loss, submit documents, and the insurer verifies or appoints a surveyor for larger losses. The insurer then decides, and either settles or repudiates with reasons. If you disagree, you use the grievance route.

How does the Insurance Ombudsman process work?

You first complain to the insurer and wait for its reply or the response period. If the answer is unsatisfactory or absent, you can approach the Insurance Ombudsman within the limits and time rules in the workbook. Consumer forums are still open.

What should an adviser check before recommending a general insurance policy?

Check the client's need, sum insured, exclusions, waiting periods, sub-limits, co-pay and deductibles. Also check the insurer's claim service and network, then premium. Document why the policy suits the client.