Occasionally, the one who buys a policy of mortality insurance (called the policyholder) and the insurance company disagree on the issue of whether the company is required to pay a request for benefits (called a “claim”). People usually learn after it is too late that many of these problems and disputes could have been avoided. This article, which concludes a two-part series on mortality insurance, discusses duties often found in mortality policies that, if not followed by policyholders, could result in the denial of a claim. Here are some of them.

The Important Duty of Timely Notice When Your Horse is Injured or Ill
One of the most common reasons for which mortality insurance companies deny coverage is untimely notice. That is, the policy holder (or, if allowed, someone on his or her behalf) has failed to comply with the policy’s requirement of notifying the insurance company when the insured horse has become injured, lame, sick, or in an accident. By contacting the company when the horse is already on the verge of demise — or, worse yet, after the horse has been destroyed — the policyholder is almost certainly asking for trouble.When does the policy require notification? Read your policy very carefully. Notice requirements can vary from company to company. Most mortality insurers require policyholders to give immediate or prompt notice of an insured horse s injury, lameness, or illness.What’s so important about notice, anyway? Mortality insurers usually insist on timely notice. The rationale is that the insurance company, when issuing a policy on your horse, has a financial interest in the horse’s well-being. The company wants to know if its investment is jeopardized. Complying with the duty of prompt notice will make sure that the company has this information.Can the matter wait until another day? What if it is a Sunday evening, and your horse is wobbling or showing signs of colic? Chances are good that you will have summoned your veterinarian. However, you might assume that the day of the week or lateness of the hour prevents you from notifying your mortality insurance company. Is that a valid assumption? No. Most mortality insurance companies expect to receive notification calls at any time. For this reason, companies generally designate people to receive calls 24 hours a day and 7 days a week.Do insurance companies really take action after receiving notice? Yes. For example, when a horse colics, the insurance company can do any number of things, including: investigate what caused the problem; review with the attending veterinarian the type of medical attention the horse is receiving; order a new course of treatment; send the horse to another veterinarian; determine whether the horse’s condition is covered under the policy; give consent to euthanize the horse; and/or plan for an immediate post-mortem examination. A company that has been deprived of the opportunity to take some or all of these actions, because you have failed to give it proper and timely notice, will be more likely to deny your claim. The company might be legally justified for doing so.

The Importance of Notifying the Right Person or Entity
From the insurance company’s standpoint, notice that has been improperly directed may be the same as no notice at all. Sometimes, people who fail to read their mortality insurance policies wrongly assume that they can satisfy the policy’s notice requirement by notifying their insurance agent or leaving a message on the agent’s answering machine. The problem is, most policies do not specify the agent as the one to receive notice. Direct your notice to the exact person or company specified in the policy. It can’t hurt to keep the appropriate contact person’s phone number and your policy number in the barn office or near the barn phone as well as in your tack trunk, wallet, truck, trailer, and car.

The Important Duty of Truthful Representations in the Application
It goes without saying that anyone who applies for mortality insurance must provide truthful information. Under the laws in most states, if a company later learns of a material misrepresentation or omission in the insurance application, that company may be legally justified in voiding the policy and denying a claim. The rationale for this rule is that the company and its underwriters are relying on truthful information before agreeing to issue a policy at a given rate. Court rulings in some states provide that even if an applicant had no intention of deceiving an insurance company, but the application contained untrue or misleading statements, the company might still be justified in voiding the policy and denying benefits. A few states, such as California, Louisiana, New York, and Texas, have statutes on the books addressing the issue of what kinds of misrepresentations can justify a company in voiding a policy.

In conclusion, please keep the following ideas in mind:

  • A mortality insurance policy is a contract between the policy holder and the insurance company. By reading your mortality insurance policy very carefully, you will learn about your duties under the policy. Insurance policies, in recent years, have more easy to read and understand.
  • Before purchasing mortality insurance, consider asking your insurance agent about duties expected of you under the policy. A knowledgeable agent will be able to explain them to you or will forward your questions to an appropriate person at the insurance company.
  • All states have statutes regarding insurance and cases on the books that affect the duties of policyholders. These authorities may govern notice requirements (even when late notice might be excused in some states), misrepresentations, and rights that policyholders may have in regard to their insurance. Because these laws and cases differ from state to state, direct your specific questions to a knowledgeable attorney.

This article does not constitute legal advice.

Julie I. Fershtman, Esq.
About the Author

Foster Swift Collins & Smith PC
One Northwestern Plaza
28411 Northwestern Hwy., Ste. 500
Southfield, Michigan  48034


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Complying With Duties Under Mortality Insurance Policies

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