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Insurance Analyser Series – Episode 3 – Room Rent Limit and Proportionate Deductions

Welcome to the Insurance Analyser Series – Episode 3. Today, we delve into a critical aspect of health insurance that often goes unnoticed until a claim is made: the room rent limit.

Understanding this aspect is essential to grasp how it could impact your claims.

What is Room Rent Limit?

Every health insurance plan has elements that can affect the claim amount, and one such element is the room rent limit.

This limit refers to the maximum amount an insurer will pay for hospital accommodation on a daily basis.

Types of Room Rent Limits

There are two main types of room rent limits that insurers impose based on the specific policy you’ve chosen:

  1. Financial Limit: Typically set at 1% of the Sum Insured, this limit restricts the amount you can spend per day on hospital accommodation. For instance, with a 5 lakh sum insured, the room rent limit would be Rs 5,000 per day.
  2. Room Category Limit: Some policies specify particular types of rooms they cover, such as private rooms or shared accommodation. Regardless of the room’s actual cost, this limit ensures you get the specified room type.

How Room Rent Limits Work

Let’s consider an example: You opt for a room costing Rs 8,000 per day, but your policy sets the limit at Rs 4,000 per day.

You’ll have to pay the difference of Rs 4,000 out of your pocket. However, the catch lies in the proportionate deductions clause.

Proportionate Deductions

Under this clause, you’re not only responsible for the difference in room rent but also for a proportionate amount of the entire bill.

This deduction is calculated based on the proportion of the approved room rent to the claimed amount.

For instance, if you have a Sum Insured of 10 lakhs but are eligible for only 50% of the claim due to this clause, you could end up paying a substantial portion of the bill from your own pocket.

Reasoning Behind Proportionate Deductions

Insurers apply these deductions to safeguard against inflated charges by hospitals for different room types.

This ensures fair treatment and prevents policyholders from bearing unreasonable costs.

Navigating Room Rent Limits

Opting for a policy without a room rent limit can be a solution. Most comprehensive policies come without such limits, providing more flexibility and coverage.

It’s essential to review your policy details carefully and consider options for porting to a plan without room rent restrictions.


Room rent limits not only dictate the type of accommodation you receive but also impact the extent of your insurance coverage.

Understanding these limits and their implications is crucial for making informed decisions about your health insurance policy.
Take the time to review policy terms and conditions thoroughly to ensure adequate coverage when you need it most.

*Disclaimer – This is for information purposes only and not investment advice. Data credit to the rightful source.