The clause that shrinks your health cover

Friend forwarded me his health insurance claim settlement last week, half proud he was finally using the cover, half confused. Rs 4 lakh hospital bill. The insurer paid 2.5. He holds a 5 lakh policy. He did not come anywhere close to exhausting it. So he asked me the obvious thing. Where did the other 1.5 lakh go.

Not the sum insured. The room.

His policy caps room rent at 1 pct of the cover per day. On a 5 lakh policy that is Rs 5,000 a night. He checked into a room that cost 10,000. Twice the cap. Here is the part almost nobody reads until it is too late. When you cross the room limit, the insurer does not just trim the extra room charge. It settles the whole linked bill in the same proportion. His room was double the cap, so the claim paid at half.

That 50 pct rode straight through everything that moves with the room. The Rs 2.5 lakh of surgery and nursing came down to 1.25. The Rs 50,000 room bill came down to 25,000. Only the medicines, implants and tests sat outside the proportion and got paid in full. Add it up and a 5 lakh cover behaved like about 2.5 the one day it actually had to work. He wrote the last 1.5 lakh himself.

The lesson I keep repeating to anyone who will listen. The sum insured is the ceiling. The room rent clause is the throttle. And a bigger sum insured does not fix a low room cap, they are different dials, a 10 lakh policy with the same 1 pct cap has the same trapdoor.

So before you read the cover figure, read the room rent line. Look for no room rent capping, or a single private room with no sub limit. The number on the brochure is what you are covered for. The clause in the wording is what you actually collect.

How to read the fine print before you buy: