Notice of Claim and Claim Forms Provisions

(Typical wording*):

“Notice of Claim: Written notice of claim must be given to the insurance company within twenty (20) days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible. Notice given by or on behalf of the insured to the insurance company at [insert the location of such office as the insurance company may designate for such purpose], or to any authorized agent of the insurance company, with information sufficient to identify the insured, shall be deemed notice to the insurance company.”

The Notice of Claim provision is required by state law. The reason for imposing on the insured a sense of urgency in filing claims under an individual health insurance policy is to allow the insurance company an opportunity to investigate the claim while data is readily available and recollection of events is fresh. Late notice may hamper the insurance company’s ability to complete its investigation and determine whether or not benefits are due. Late notice could prejudice the rights of both the insurance company and you, the insured.

If you fail to file a claim on time, you stand to possibly lose your insurance benefits. Whether in fact you will depends on the court in your area and those decisions have been mixed:

  1. Most courts say that before an insurance company will be allowed to deny the claim due to late notice, the company must prove that it was “prejudiced” in some way by that late notice. This means that due to the late notice, the company must show it either had to pay benefits it might not have owed or it had to pay more than it would otherwise have owed because it was unable to gather all the necessary information to evaluate the claim properly.
  2. Others courts have said that failure to give timely notice shall result in loss of insurance benefits whether or not the insurance company, because of the delay, has had to pay benefits it might not have owed or had to pay more than it would otherwise have owed because it was unable to gather all the necessary information to evaluate the claim properly.
  3. A third view is that if there is an unreasonable delay in presenting a claim, the court will assume there was “damage” to the insurance company (whether there actually was or not). This means that the court will assume the insurance company had to pay benefits it might otherwise not have had to pay, or had to pay more than it would otherwise have owed because it was unable to gather all the necessary information to evaluate the claim properly. The court makes this assumption even if this is not the case. Then you, the insured, bear the burden of showing that the insurance company did not pay benefits it did not owe or did not pay more than it owed because of your failure to notify them of the claim within a reasonable time period.

Although most courts favor the first approach, as an insured you can never be certain how a court may view your case – should it get that far. Clearly your wisest course of action is to file a notice of claim with the insurance company as soon as you can. If there are extenuating circumstances that prevent prompt filing of a claim, they must be given due consideration by the insurance company, as the provision states. Your prompt filing of the claim will, in most cases, result in a payment of benefits by the insurance company.

Keep in mind that a proper notice of claim should be in writing. You could run into a problem if you are relying on a phone call to the insurance company as providing timely notice. And, of course, you should keep a copy of your written notice in your records with evidence of mailing as proof that your notice was timely filed.

Claim Forms

Individual health insurance polices are also required to have a provision dealing with

Claim Forms. A typical exampleof such a provision is as follows:

“Claim Forms: The insurance company, upon receipt of a notice of claim, will furnish to the claimant such forms as are usually furnished by it for filing proof of loss. If forms are not furnished within fifteen (15) days after the giving of notice, the claimant shall be deemed to have complied with the requirements of this policy as to proof of loss upon submitting, within the time fixed in the policy for filing proofs of loss, written proof covering the occurrence, the character and the extent of the loss for which claim is made.”

Basically, this provision protects you from delays caused by the insurance company. If the insurance company, after receiving your notice of claim, does not provide you with claim forms in a timely manner, you can still satisfy their requirements for proof of loss without using their forms by providing your own written documentary evidence in support of your claim. You should describe the occurrence, the character (nature) and the extent of the loss.

*Wording may vary from contract to contract and from state to state.

Overview

Time Limit on Certain Defenses Provision or the Incontestable Provision

Renewal and Reinstatement Provisions in a Health Insurance Policy