Uniform Policy Provisions, Health Insurance

What are Uniform Policy Provisions, Health Insurance?

Uniform policy provisions refer to a set of clauses, some mandatory and some optional, that insurance companies include in written insurance policies. Each state has a uniform individual accident and sickness policy provisions law which dictates precisely the provisions that must appear in an insurance policy. In general, the state requires 12 mandatory provisions and gives the insurance company discretion to include any of 11 optional provisions when writing a policy.

Understanding Uniform Policy Provisions, Health Insurance

Uniform policy provisions provide insurance carriers with a list of required and optional items to include when writing insurance policies. The National Association of Insurance Commissioners (NAIC) played a leading role in developing the list of provisions. Each state has implemented its own version of the uniform individual accident and sickness law, which lays out specific requirements. The states can customize their requirements as long as those adjustments do not infringe on the rights of the insured. The provisions appear in an insurance policy as a series of clauses.

Mandatory Uniform Policy Provisions

The 12 mandatory provisions include the rights and obligations of both the insurer and the insured. Among the burdens that fall on the insurer are the need to include any relevant information within the original policy or official amendments, the requirement of a stated grace period for delinquent premium payments, and instructions for reinstatement of a policyholder who misses that grace period. The provisions that cover the responsibilities of the policyholder include requirements that they notify the insurer of a claim within 20 days of a loss, provide proof of the extent of that loss, and update beneficiary information when changes take place.

Optional Uniform Policy Provisions

After the 12 mandatory provisions, insurers may include any of 11 optional clauses in a policy. The policyholder and the insurer can negotiate which of these provisions will be part of the policy, but generally, the insurer will have the final say. The 11 optional provisions tend to place more of a burden on the insured to comply with certain requirements than on the insurer. These requirements include the obligation to inform the insurer of changes in income, especially if due to a disability, or changes to a more or less dangerous occupation. The optional clauses also state that any misstatements regarding age, use of illegal substances, or engagement in illegal occupations will have an adverse impact on the insured’s ability to collect on claims otherwise covered by a policy.