Policy Time Limits on Certain Defense or Incontestable Provisions

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jun 29, 2022

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(Typical wording*):

(a) After three (3) years from the date of issue of this policy no misstatements, except fraudulent misstatements, made by the applicant in the application for the policy shall be used to void the policy or to deny a claimfor loss commencing after the expiration of the three-year period.

(b) No claim for loss incurred commencing after three (3) years from the date of issue of this policy shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed prior to the effective date of coverage of this policy.”

Essentially, paragraph (a) means that if three years have passed since your policy was issued, your insurance company may not void the policy or deny a claim for an alleged misrepresentationor misstatement on your application. Paragraph (b) means that the insurer also may not reduce or deny a claim because the particular physical condition that is the basis of your claim existed prior to the date of your application, should they discover it three years after the policy was issued.

Note that with regard to (a), above, if the insured’s age was misstated, and the policy has a provision allowing for adjustment of benefits based on correct age, the time limit of this provision does not apply. An adjustment based on age can be made at any time.

Without this provision, an insurance company discovering a misrepresentation or a pre-existing condition many years after the date on which the policy was issued would be able at any time to rescind coverage or to reduce or deny a claim for a pre-existing condition. State legislators felt that policyholders, after a long time period in which they have paid premiums, are entitled to have a feeling of security and certainty in their policies and that a time limit of about 3 years was sufficient for most insurance companies to discover any misrepresentations or apply pre-existing conditions. The time limit varies from state to state, but is usually either 2 or 3 years.

Grace Period

(Typical wording*):

“Grace Period: A grace period of 31 days will be granted for the payment of each premium falling due after the first premium, during which grace period the policy shall continue in force.”

The grace period allows you more time to pay your premium after the due date during which the policy may not be canceled. If the due date to pay your premium, for example, is April 30th, a typical grace period would give you until May 31st to pay or be subject to cancellation. The grace period may be as few as 7 days if the policy requires a weekly premium, 10 days for a monthly premium and 31 days for most other policies. The majority of policies, however, allow for 30 or 31 days.

The grace period automatically keeps your policy coverage in force for a defined period after the date on which renewal premiums are due but not paid. The required language of the provision is very clear so that you will not be confused about the amount of “extra” time you have in which to pay the premium and keep your policy in force even though the premium due date has passed.

If the policy is not guaranteed renewable, i.e., one in which the insurance company has the right to refuse to renew it on the policy anniversary, then the above wording in the grace period provision must be preceded by the following additional wording:

Additional Wording if company has right to refuse to renew policy on anniversary

“Unless not less than thirty (30) days prior to the premium due date the insurance company has delivered to the insured or has mailed to his last known address, as shown by the records of the insurance company, written notice of its intention not to renew this policy beyond the period for which the premium has been accepted; …”

Lawsuits focusing on the grace period often concentrate on the timeliness of payment of the premium. A relative of an insured, for example, may argue that the full grace period had not elapsed at the time of the insured’s death and that benefits should be paid. If you, the insured, die after the premium due date but before the end of the grace period, any benefits due will be reduced by any premium due. You or your attorney may also be able to argue that your insurance company, because of certain practices such as a pattern of accepting payments beyond the grace period, has waived its right to terminate the policy at the end of the grace period.

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

Related articles:


Renewal and Reinstatement Provisions in a Health Insurance Policy

Notice of Claim and Claim Forms Provisions

Proof of Loss and Time for Payment of Claims Provisions

Change of Occupation, Misstatement of Age, Unpaid Premium & Illegal Occupation Provisions

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