Claims Procedures: Notice of Claim and Proof of Loss

In the world of Accident and Health insurance, the claims process is governed by a set of mandatory uniform policy provisions. These rules were established to ensure that policyholders receive fair treatment and that insurers follow a standardized timeline when processing benefits. For candidates preparing for the complete Accident & Health exam guide, understanding the specific days and deadlines associated with these provisions is critical.

The claims procedure follows a logical sequence: the insured notifies the insurer of a loss, the insurer provides the necessary paperwork, and the insured provides detailed evidence of the loss. Each of these steps is bound by strict time limits designed to protect the consumer from unnecessary delays and to allow the insurer to investigate claims while the evidence is still fresh.

The Notice of Claim provision describes the policyowner’s obligation to notify the insurance company that a loss has occurred. According to the uniform provisions, written notice of a claim must be given to the insurer within 20 days after the occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible.

Notice can be provided to the insurer's home office or to any authorized agent of the insurer. This notice does not need to be exhaustive; it simply needs to provide enough information to identify the insured and the nature of the loss. If the insured is unable to provide notice within 20 days due to physical or mental incapacity, the requirement is generally waived until they are reasonably able to comply.

• Purpose: To alert the insurer that a potential claim is forthcoming.
• Timeframe: 20 days.
• Method: Written notice to the company or agent.

Once the insurer receives the Notice of Claim, the burden of the next step shifts to the company. Under the Claim Forms provision, the insurer must furnish the claimant with the specific forms required for filing proof of loss. This must be done within 15 days of receiving the notice.

If the insurer fails to provide the forms within this 15-day window, the insured is considered to have complied with the requirements of the policy if they submit their own written proof describing the occurrence, the nature of the loss, and the extent of the loss. In this scenario, a simple letter or a doctor’s statement may suffice as a substitute for the official company forms. This protection ensures that an insurer cannot avoid paying a claim simply by withholding the necessary paperwork.

The Proof of Loss provision is the formal statement made by the insured to the insurer regarding a claim. It provides the insurer with the necessary data to determine the amount of the benefit payable. Written proof of loss must be submitted to the insurer within 90 days of the date of the loss.

For ongoing losses, such as disability income or long-term care, the 90-day period begins at the end of the period for which the insurer is liable. If it is not reasonably possible to give proof within the 90-day limit, the claim will not be invalidated if the proof is submitted as soon as possible. However, except in the case of legal incapacity, proof of loss must generally be submitted no later than one year from the time proof is otherwise required.

Typical items included in a Proof of Loss include:

• Completed claim forms.
• Itemized hospital or physician bills.
• A signed medical authorization allowing the insurer to review records.
• For disability claims, a statement of earnings or employer verification.

Once the insurer receives the proof of loss, the Time of Payment of Claims provision dictates how quickly they must pay. For most medical expenses, claims must be paid immediately upon receipt of written proof of loss. However, for periodic payment benefits (like Disability Income), the payments must be made at least monthly.

If a dispute arises, the Legal Actions provision limits when a policyowner can sue the insurance company. An insured must wait at least 60 days after submitting written proof of loss before they can initiate a lawsuit. This gives the insurer time to investigate and resolve the claim. Furthermore, any legal action must be started within 3 years from the time proof of loss was required to be furnished.

To practice these concepts further, visit the practice Accident & Health questions page.