Uniform Policy Provisions, Health Insurance

Uniform policy provisions refers to a set of clauses, some mandatory and some optional, that states require or permit insurance companies to 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 any 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.

Uniform policy provisions provide insurance carriers with a list of required and optional items to include when writing an insurance policy. 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. The 12 mandatory provisions include 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.

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 final say over what it includes in a policy.  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 disability, or changes to a more or less dangerous occupation. The optional clauses also state that any mis-statements 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.