2 policies of Health insurance –how to lodge claim ?

Preeti Kulkarni has written a good article in The Economic Times of January 6, 2010 on “Take extra cover for sake of your health”

The Heading carries the line “In many cases, claims can be made under both the policies” It is very interesting and has resulted in many calls being received by me from persons who have visit this website.
The same article under the sub heading “Making a claim under two policies.” mentions
“Many policy holders tend to assume that they can file a claim under any of the policies they have signed up for, which may not always be the case; whether the individual can make a choice to claim depends on the provisions made in the policies taken. Also, whether the individual can make a choice to claim depends on the provisions made in the policies taken. Typically, there is a declaration sought from the customer on the policies under which s/he is covered, and the total liability is shared by the insurers, informs.
The contribution clause in the policies states that claims can be made under both the polices, in the same ratio as the sum insured. For instance, if you are covered under a corporate policy with a sum insured of Rs. 2 lakh, in addition to a personal cover of Rs. 1 lakh and makes a claim for Rs. 1 lakh, the insurer servicing the former will contribute around Rs. 66,000 while the balance will come from the other insurer. However, according to Pawan Bhalla, CEO of Rakish TPA, in India, policyholders are not legally bound to disclose the details of any existing policy or make a claim under any of the two policies they are covered under.”

Pawan has mentioned that it is not necessary to make the declaration to both the Insurance Companies.

Reality is that if the claim is of small sum then everything is fine. But if the claim is large and let us say the facts are

Policy 1 Coverage under corporate group policy = Rs. 5 Lakh
Policy 2 Coverage under own policy = Rs. 5 Lakh

Policy 1 was issued in 2003, and is continuing. A claim was lodged in June 2009, for Rs. 2 lakh and was paid.

Policy 2 was issued in November 2008 and is continuing. Insurance company 2 was not informed about existence of policy 1.

Let us say in January 2010 claim is to be lodged for Rs. 7 lakh.

This is the point at which problem like claim settlement arises when the claim is to be lodge with both companies.

As only one set of original documents (Invoice bill / Receipt / Test Reports / Discharge Summary) can be issued by Hospital therefore if will become necessary for the client to reveal to both the companies about details of polices. If any document is required from Insurance Company (Policy 1) they will point out when you took this policy and why we were not informed about policy 2 on earlier occasion as they would have asked Insurance Company 2 to pay half of the claim amount of Rs. 2 Lakh. In most probability Insurance company 1 while paying the claim of Rs. 7 lakhs in ratio of 1;1 which means Rs. 3.50 lakh will deduct Rs. 1 lakh for June 2009 claim.

In the absence of letter from Insurance Company 1 he can not go to Insurance Company 2. Alternatively if lodges original documents with Insurance Company 2 then he may find slightly easier but problem for claim settlement is bound to emerge.

Any effort to get 2 sets of original form Hospital is not suggested as Insurance Co’s / TPA’s are cautious and are trying to control frauds as many cases of multiple claims being lodged with more than 1 Insurance Company have been noticed / reported.

In the end I will like to say you are buying Insurance for having peace of mind then it is better to reveal to both the Insurance Companies about the policy.