IndiaThe insurance company offered too little. Can I reject it?
Yes, you can reject an inadequate insurance settlement offer in India — there is no legal obligation to accept it, and you may negotiate, file a complaint with the Insurance Ombudsman, or sue in court.
What the Law Says
Indian law gives policyholders the right to challenge unfair or inadequate insurance settlement offers. The Insurance Ombudsman Scheme and the Limitation Act set key timelines and remedies.
Under the Insurance Ombudsman Scheme, 2017, you may file a complaint if your insurer has rejected your claim, delayed settlement, or offered an unreasonably low amount — provided the claim value does not exceed ₹30 lakh and you’ve first approached the insurer in writing.
The Scheme mandates that complaints must be filed within one year of the insurer’s final rejection or partial settlement. The Ombudsman must dispose of complaints within 90 days and provides a free, binding (up to ₹30 lakh), and speedy alternative to court.
If the dispute exceeds ₹30 lakh or falls outside the Ombudsman’s jurisdiction, you may file a civil suit. The Limitation Act, 1963 sets a 1-year limitation period for suits relating to insurance claims arising from contracts of insurance.
Statutory TextNo complaint shall be entertained unless it is made within one year from the date of receipt of the final reply of the insurer.
— Insurance Ombudsman Scheme, 2017, Clause 12(1)
Statutory TextThe Ombudsman shall endeavour to dispose of the complaint within a period of 90 days from the date of receipt of the complaint.
— Insurance Ombudsman Scheme, 2017, Clause 15(1)
Statutory TextA suit upon a contract, when the contract is not registered, shall be instituted within three years from the date when the contract is broken.
— Limitation Act, 1963, Art. 55 — Suit for breach of contract
What Courts Have Said
Indian courts have consistently upheld the right of insured persons to fair valuation and rejected arbitrary or unilateral settlement decisions by insurers.
The Court held that insurers cannot unilaterally decide claim amounts without proper assessment or opportunity to the insured; rejection of a reasonable claim without justification violates principles of fairness and good faith.
The Court ruled that insurance companies must act in utmost good faith (uberrimae fidei) and cannot deny or undervalue claims based on technicalities or without valid grounds supported by evidence.
What to Do
Write to your insurer formally objecting to the low offer and requesting a detailed, itemised justification.
File a complaint with the Insurance Ombudsman within 30 days of the insurer’s final response — use https://www.iob.gov.in.
If the Ombudsman’s award is unsatisfactory (or claim > ₹30 lakh), consult a lawyer to file a civil suit within 1 year of claim denial.
Preserve all documents: policy copy, claim intimation, surveyor reports, repair estimates, medical bills, and correspondence.
Sources
Not legal advice. This article is general information based on publicly available sources, written for educational purposes. Laws change and individual situations vary. Consult a licensed attorney in your jurisdiction before acting on anything you read here. Last reviewed: 2026-06-08.