04 April 2026
This is the formal rejection of an insurance claim or the denial of liability by the insurer.
In simple terms, repudiation of an insurance claim happens where an insurer reviews a claim and finds the claim unpayable for various reasons.
A common question arises as to whether Insurance Companies are justified into repudiating claims. The honest answer—though it may not sit well with many policyholders—is yes.
Insurance companies are allowed to repudiate claims, but only where they have valid reasons grounded in the insurance policy and the law. In other words, repudiation isn’t something insurers can do arbitrarily; it must be supported by clear contractual terms and recognized legal principles, and it should always be done in good faith.
Legal Grounds for Repudiation of an Insurance Claim
a. Violation of Policy Terms and Conditions
Insurance policies contain specific terms and conditions that the insured must comply with. Failure to adhere to these conditions, whether procedural or substantive, may entitle the insurer to repudiate the claim.
b. Non-Disclosure or Misrepresentation of Material Facts
Insurance contracts are founded on the principle of uberrimae fidei (utmost good faith). The insured is therefore required to disclose all material facts at the time of entering into the contract. Failure to disclose or providing false information such as concealing health conditions, lifestyle habits or the true condition of a property gives the insurer a legal ground for repudiation.
In BMK v AIG Kenya Insurance Ltd [2020] eKLR, Lady Justice Maureen A. Odero had this to say: – “There can be no doubt that Insurance contracts are amongst the category of contract which are described as “uberrimae fidei” i.e of utmost good faith and require voluntary disclosure by the parties thereto.
Similarly, in Newsholme Bros. vs. Road Transport and General Insurance Co. Ltd [1929] All ER 442 at 444: “ …the contract of insurance requires the utmost good faith; the insurer knows nothing; the assured knows everything about the risk he wants to insure and he must disclose to the insurer every fact material to the risk.”
c. Late Notification of the Claim
Most insurance policies require the insured to notify the insurer of any loss or damage within a specified timeframe.
d. Policy Exclusions
Insurance policies clearly define the scope of coverage including specific risks that are excluded. Where a claim falls within these exclusions, the insurer is not liable to indemnify the insured.
e. Fraudulent Claims
If the insurer discovers evidence indicating that a claim is fraudulent, whether through exaggeration, fabrication or deliberate misrepresentation, the insurer is entitled to repudiate the claim.
f. Non-Payment of Premiums
Payment of premiums is a fundamental obligation under an insurance contract. Failure to pay premiums may result in the lapse or suspension of the policy, thereby relieving the insurer of liability.
Effects of Repudiation
a. It defeats the purpose of Insurance
The core purpose of Insurance is risk protection. However, if the insurer repudiates claims, the whole system loses credibility and policy holders loose confidence in the insurance system as the “safety net”
b. Damages reputation and trust
Insurance industry heavily relies on public trust, when that trust is damaged, there is no more customer confidence and that harms the sustainability of insurance as a business
c. Upon repudiation, the insured suffers loss of the current claim and the premiums he/she has been investing in the insurance as the premiums are not recoverable.
d. Litigation costs and delays as repudiation often leads to court disputes
e. The insured suffers loss of expected contractual benefits
f. Emotional and psychological turmoil especially on matters accident claims, death claims, illness claims
g. Insurers are susceptible to legal liabilities when courts rule that the insurer acted in bad faith
h. Breakdown of contractual relationships and trust hence future dealings between the parties becomes difficult.
Conclusion
Repudiation is not a loophole for insurers to escape liability, rather it is a legal right that insurers have that must be exercised in utmost good faith, fairly and reasonably within the confines of the law.
By Mary Mwende, Lawyer – A.N. Kamau & Co. Advocates
