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What is an Incontestability Clause?
An Incontestability Clause is a clause in the insurance policy which states that the insurance company will not deny a claim on the basis that you misrepresented yourself on the application for insurance. Usually, the policy must be in effect for two years before the Incontestability Clause applies.
If your policy does not have an Incontestability Clause, then the insurance company can ALWAYS deny a claim if it shows that you made misrepresentations on the application, EVEN if you have been paying premiums for years. However, the insurance company must reimburse all of your premium payments.
When does insurance coverage end?
Your coverage should last until the anniversary date of the policy, which is usually six months or one year from the date your coverage began.
However, YOU may cancel your insurance coverage at any time without penalty. Simply notify the insurance company that you are canceling your insurance. You are entitled to a refund of any unused premium payment.
In addition, the insurance company can usually cancel your policy before the anniversary date if premiums are not paid or if there was a material misrepresentation on the application.
When does insurance coverage begin?
In most cases, your insurance coverage begins after the insurance company has approved your application and you have sent in your first premium payment.
If a brochure, pamphlet or ad used to promote a policy suggests that something is covered but I later learn that it is not, do I have a remedy?
Possibly. But there are time and other limitations on your right to raise these issues.
This is one reason you should attempt to identify any inconsistencies between the way a policy is marketed and the policy itself.
This also is why it is important to keep written materials and notes of conversations with agents in your insurance file or notebook. Do not throw policy-related promotional materials away!