What is a uniform law on personal accident and sickness policy provisions?
A Uniform Individual Accident and Sickness Policy Provisions Act is a law that every US state has enacted in one form or another. It stipulates that individual health insurance policies must contain certain provisions to be valid.
Key points to remember
- Uniform policy provisions are a set of mandatory and optional clauses included in health insurance policies.
- There are 12 mandatory clauses and 11 optional clauses for use by insurance companies.
- Each state has created its version of the law that provides a uniform accident and illness law, detailing mandatory and optional provisions.
Understanding the Uniform Personal Accident and Sickness Policy Provisions Act
The legislation was created to set a standard of quality and to ensure that health insurance policies have an adequate level of cover by requiring certain provisions to be written into each policy. It was written by the National Association of Insurance Commissioners (NAIC), a nongovernmental organization composed of the insurance commissioners of each state and territory.The NAIC is not itself a regulatory body. Insurance markets are regulated at the state level.
Mandatory Provisions of the Uniform Policy
The 12 mandatory provisions include the rights and obligations of the insurer and the insured. Among the burdens on the insurer are the need to include any relevant information in the original policy or official amendments, the requirement of a declaration Grace period for overdue premium payments, and instructions for reinstatement of a policyholder who misses this grace period. The provisions covering the policyholder’s responsibilities include the obligation to notify the insurer of a claim within 20 days of a loss, to provide proof of the extent of this loss and to update the information on the beneficiary when changes take place.
Optional Uniform Policy Provisions
After the 12 mandatory provisions, insurers can include any of the 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 impose more 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, in particular if they are due to a disability, or to a change to a more or less dangerous occupation. Optional clauses also state that any misrepresentation regarding age, use of illegal substances or engagement in illegal activities will negatively impact the insured’s ability to collect complaints otherwise covered by a policy.