A Sub-Limit is a restriction in an insurance policy sets the maximum amount to cover a specific type of loss or cost claim. Rather than an addition to the cover, a sub-limit is part of the limit that would otherwise apply to the loss. Alternatively, it can be said that a sub-limit places a maximum on the amount available to pay that type of loss or cost. Insurance sub-limits are usually a stated percentage of an aggregate coverage under a policy. For example, room rent in a medical insurance cover could have a sub-limit cap of 2% of the total sum insured for a policy of Rs 2 lakh; room rent for such cover is therefore limited to Rs 4,000. Here’s why you should stick to your room rent sub-limit.
Many insurers attach more significance on room rent Sub-limit
than other sub-limit categories and usually peg the decision to reimburse other medical expenses claims on the basis of adherence to this particular limit. This is because many hospitals employ a differential billing system for the room rents based on the type selected i.e. the cost of other medical services such as nursing expenses are higher on the high end / more expensive rooms than the cost lower cost rooms.
Non-Adherence to room rent sub-limit has a domino effect
on other costs as mentioned before. Insurers will reduce the value to reimburse by a proportion equivalent to the amount exceeded over and above the sub-limit. For example, say the room rent-sub-limit is capped at 2.5% per day of the total sum insured for a policy of 1 lakh, but the insured is hospitalized where the room rent charge is at Rs 3,000 per day; the proportion of the excess (above the room rent sub-limit) stands at 20%. The insurer will subsequently reimburse all other medical expenses less 20% of the value. This gap will be bridged by the insured through his/her personal means, often creating conflict due to dissatisfaction.
In order to avoid
inconveniences that arise from non-adherence to room rent sub-limits, it is prudent to cross check with your insurer on the applicability of room rent sub-limits in your plan, the set limit value against the cost of rooms for a hospital you intend to receive medical services. Alternatively, when buying medical insurance, you can go for the more expensive policies that are devoid of sub-limit clauses.