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- Title
TWO STATE SUPREME COURTS INVOKE INCONTESTABILITY STATUTE TO BAR LIFE INSURER FROM DENYING CLAIMS THROUGH DEFENSE OF PREEXISTING CONDITION.
- Authors
Stempel, Jeff
- Abstract
The article discusses the case Galanty v. Paul Revere life Insurance Company. The incontestability clause has been a part of life insurance policies for perhaps 150 years. Legislation mandating such clauses became common in the 20th century. Later, the provision spread to disability clauses through either legislation or contract drafting by the insurer. Incontestability provisions state that after a policy has been in force for more than two years, an insurer may not rescind the policy on grounds of misrepresentation in the application. In effect, the incontestability provision creates a two-year "statute of limitations" for insurers to investigate statements made and the underwriting facts surrounding an application. Alter the statute expires, the insurer is stuck with the policy unless the misrepresentation was intended to deceive or was otherwise fraudulent. However, the clear majority rule is also that the incontestability provision of a policy does not prevent an insurer from asserting other defenses such as lack of coverage or applicability of an exclusion. But what happens when these two principles clash because of particular language in an incontestability statute or the particular context of a loss claim.
- Subjects
UNITED States; LEGAL judgments; LIFE insurance policies; COURTS; GALANTY v. Paul Revere Life Insurance Co. (Supreme Court case); ACTIONS &; defenses (Law); MARIE Deonier &; Associates v. Paul Revere Life Insurance Co. (Supreme Court case); INSURANCE; GOVERNMENT insurance; CASE studies; LEGISLATION; FRAUD
- Publication
Journal of Risk & Insurance, 2001, Vol 68, Issue 2, p362
- ISSN
0022-4367
- Publication type
Article