Travel Insurance Claim Partially Rejected for Co-Insured Spouse? Here Is What You Can Do

One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

Rohan Iyer and his wife Kavita Iyer, residents of Gomti Nagar, Lucknow, had purchased an international travel insurance policy from Bajaj Allianz General Insurance in early March 2025. The policy covered both of them under a single family floater plan for an international trip they had planned together, with joint flight bookings and a shared hotel reservation. Rohan's grandmother passed away on 18 March 2025, just days before their scheduled departure, making it impossible for either of them to travel.

Rohan filed a trip cancellation claim immediately. Bajaj Allianz accepted his portion, acknowledging that his grandmother qualified as an "immediate family member" under his policy coverage. But they rejected Kavita's claim entirely — reasoning that Rohan's grandmother was not Kavita's immediate family member as per the policy definition. Only half the hotel cost was reimbursed, and the full flight cancellation amount for both was denied.

Rohan had already written to the insurer's grievance cell twice and received the same templated response each time. A general civil lawyer he consulted advised him to simply accept the partial settlement. Dissatisfied, he approached Advocate Sudhir Rao, who identified this as a textbook case of arbitrary and one-sided contract interpretation by the insurer, actionable under consumer protection law. A formal complaint was filed before the District Consumer Disputes Redressal Commission, supported by a detailed legal argument on the indivisible nature of the trip cancellation event. The Commission ruled in Rohan and Kavita's favour, directing full reimbursement along with compensation for mental agony and litigation costs.

Advice in Such Cases

Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Send a formal legal notice to the insurer first. Under Section 38(1) of the Consumer Protection Act, 2019, the Commission expects evidence that you attempted resolution before filing. And here's the thing — a well-drafted notice from an advocate often prompts insurers to reconsider without further litigation.

Document every communication with the insurer. Emails, letters, call recordings if legally obtained, all written rejections. These form the backbone of your consumer complaint. Don't discard anything the insurer has sent you, even if it seems routine at the time.

Insurance disputes involving policy interpretation, co-insured spouse rights, and trip cancellation events have procedural and evidentiary nuances that a general practitioner may not be fully familiar with. Engaging an advocate who regularly handles consumer and insurance matters typically leads to faster and more favourable outcomes. Frankly, the difference it makes is not small.

Applicable Sections of Law

This matter falls squarely within consumer and contract law. The following specific provisions are directly applicable:

• Section 2(7), Consumer Protection Act, 2019: Defines "consumer" — both the policyholder and co-insured spouse qualify as consumers who have paid consideration for services.
• Section 2(46), Consumer Protection Act, 2019: Defines "unfair contract terms" — a policy clause that arbitrarily excludes a co-insured spouse from a benefit triggered by a single joint-travel event may constitute an unfair contract term.
• Section 38, Consumer Protection Act, 2019: Governs procedure before the District Consumer Disputes Redressal Commission, including filing, admission, and disposal timelines.
• Section 23, Indian Contract Act, 1872: A contract term that produces an outcome unconscionable or contrary to public policy may be challenged — relevant where the insurer's interpretation renders part of the cover illusory.

Jurisdiction — Where to File the Case

Simple rule. Where the total claim value (including compensation sought) doesn't exceed Rs. 50 lakhs, the District Consumer Disputes Redressal Commission has jurisdiction. Claims between Rs. 50 lakhs and Rs. 2 crores go to the State Consumer Disputes Redressal Commission. The Insurance Ombudsman under the Insurance Ombudsman Rules, 2017 is also a parallel forum — it's free of cost and handles insurance complaints up to Rs. 50 lakhs. Territorial jurisdiction follows the complainant's place of residence or work, so you can file locally without having to chase the insurer's home city.

Limitation Period

Don't sit on this. Under Article 137 of the Limitation Act, 1963, read with Section 69 of the Consumer Protection Act, 2019, a consumer complaint must be filed within two years from the date on which the cause of action arises. Here, that clock starts from the date of final rejection by the insurer. Missing this window is fatal to the complaint. Now, before you assume there's a safety net — a condonation of delay application under Section 69(2) of the Consumer Protection Act, 2019 is technically available in genuine cases of delayed discovery, but courts grant such applications cautiously and with real reason. Don't rely on it as a fallback.

Interim Reliefs Available

Consumer forums have powers to grant interim relief under Section 38(7) of the Consumer Protection Act, 2019, including directions to the insurer not to close or write off the claim during pendency of proceedings. Where the insurer attempts to initiate recovery or offset proceedings, an Order 39 Rule 1 CPC injunction through a parallel civil suit is also available. In cases where the policy amount is substantial or the insurer signals fund diversion, attachment before judgment under Order 38 Rule 5 CPC may be sought. Make no mistake, securing interim relief early in the proceedings signals seriousness and very often pushes the insurer toward faster settlement discussions.

If You Are the Victim

• Obtain a written rejection letter from the insurer — verbal rejections have no standing before any forum and you must insist on written communication in every instance.
• File a complaint with the Grievance Redressal Cell of the Insurance Regulatory and Development Authority of India (IRDAI) through the Bima Bharosa portal, which creates an official record of your dispute.
• Approach the Insurance Ombudsman in your region — this is free, time-bound to 30 days for most matters, and binding on the insurer if the complaint is upheld.
• If the Ombudsman route fails or the claim is large, file a consumer complaint before the District Consumer Disputes Redressal Commission with full documentation.
• Keep detailed records of all cancellation costs — airline cancellation receipts, hotel forfeiture letters, and any other quantifiable loss form the basis of the claim amount.

Documents You Must Keep Ready

• Original travel insurance policy document and all endorsements or schedules attached to it
• Aadhaar card and PAN card of both the primary insured and the co-insured spouse
• Marriage certificate (to establish the spousal relationship for the co-insured)
• Death certificate of the deceased family member that triggered the cancellation
• All flight booking and cancellation confirmations, along with airline refund statements showing amounts forfeited
• Hotel booking confirmation and the hotel's cancellation/forfeiture policy letter
• All correspondence with the insurer — claim forms submitted, acknowledgement receipts, and all rejection letters
• Bank statements showing premium payments and any partial refunds received from the insurer

What Evidence Is Required?

• Primary evidence: The insurance policy document itself, which sets out the definition of "immediate family member" and the trip cancellation clause — this is the central document in any policy interpretation dispute.
• Primary evidence: Death certificate of the deceased, establishing that the triggering event actually occurred before the trip departure date.
• Joint itinerary evidence — a single booking confirmation showing both spouses on the same flights and hotel reinforces that the cancellation was an indivisible single event, not two separate decisions.
• Correspondence chain showing that the insurer accepted one claim and rejected the other simultaneously, on the same facts and the same event.
• Premium payment records confirming that the co-insured spouse paid for or was covered under the same policy for the same trip.
• Any IRDAI circulars or Insurance Ombudsman precedents on co-insured spouse coverage that support your interpretation — these serve as secondary evidence on industry practice.

How Courts Typically Approach Such Cases

Courts don't sympathise with insurers who play word games. Consumer forums in India have consistently held that insurance contracts must be interpreted in favour of the insured where ambiguity exists, following the principle of contra proferentem established clearly in cases like Oriental Insurance Co. Ltd. v. Sony Cherian, 1999 (6) SCC 451. Courts look closely at whether the insurer's interpretation is commercially reasonable or whether it defeats the very purpose of the cover. In joint-travel or family floater policies, courts have been increasingly sceptical of interpretations that split a single triggering event into separate independent incidents. The Supreme Court in United India Insurance Co. Ltd. v. M/s Pushpalaya Printers, 2004 (3) SCC 694 also affirmed that exclusion clauses must be interpreted narrowly. And here's why that matters — in Rohan and Kavita's case, it was precisely this body of precedent that made the Commission's decision straightforward.

Timeline of Legal Process

• Week 1-2: Send formal legal notice to the insurer demanding full settlement within 15 days.
• Week 3-4: If no satisfactory response, file complaint before the Insurance Ombudsman — proceedings typically conclude within 30 to 90 days.
• Month 2-3: Simultaneously or alternatively, file consumer complaint before the District Consumer Disputes Redressal Commission — complaint admitted and notices issued to the insurer.
• Month 3-5: Insurer files written version; opportunity for rejoinder by complainant.
• Month 5-8: Evidence stage — affidavits, documents tendered; cross-examination if sought.
• Month 8-12: Arguments heard; judgment typically delivered within this window for straightforward insurance disputes.
• Post-judgment: If insurer does not comply, execution proceedings under Section 71 of the Consumer Protection Act, 2019. Appeals lie to the State Commission within 45 days of the order.

Understanding the Costs

The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.

A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.

Can the Matter Be Settled Out of Court?

Yes. And this is often the faster path. Insurance disputes are well-suited to pre-litigation settlement through formal mediation or a direct negotiated settlement once a strong legal notice has been served. Under Section 89 CPC, courts may refer disputes to mediation or conciliation even after filing. Lok Adalats under the Legal Services Authorities Act, 1987 accept pre-litigation insurance disputes and can pass awards that are final and binding, with no court fees payable and awards not appealable. An Insurance Ombudsman award, if accepted by both parties, also has the effect of a binding settlement. Settlement is worth seriously considering where the claim amount is moderate and a quick, cost-effective resolution is preferred over a prolonged forum battle.

Common Mistakes People Make

• Accepting partial settlement without protest: Many claimants sign off on a partial payment without realising that doing so may be construed as a full and final settlement, closing the door on future claims for the balance amount.
• Delaying action after rejection: The two-year limitation clock starts from the rejection date. Waiting months hoping the insurer will reconsider on its own is a common and costly mistake.
• Not getting rejection in writing: A verbal or telephonic rejection is not a legal rejection. Always insist on a written rejection letter before filing any complaint.
• Filing complaints without complete documentation: Consumer forums expect all evidence upfront. Poorly documented complaints get delayed or dismissed at the admission stage itself.
• Engaging an advocate without relevant domain experience: Insurance policy interpretation disputes involve specific procedural rules before consumer forums and the Insurance Ombudsman, along with a distinct body of case law on contra proferentem and exclusion clause interpretation. A general practitioner unfamiliar with this domain may miss critical evidentiary angles or procedural steps that can weaken an otherwise strong case. Domain-specific experience in consumer and insurance litigation makes a measurable difference in how efficiently the matter is handled.
• Posting about the dispute on social media: Public statements

Advocate Sudhir Rao, Supreme Court of India