Mandatory provisions II: claim notice, forms, proof of loss, and payment of claims | Insurance producer

Claim Notice, Forms, Proof of Loss, and Payment

Every individual accident and health policy delivered in Texas must contain a standard set of mandatory (uniform) provisions. The first group deals with reinstatement and grace; this second group governs the claim itself — how the insured tells the company something happened, how the company responds, and how fast the money must move (Tex. Ins. Code ch. 1201).

Think of it as a relay: the insured starts, the insurer hands back a form, the insured returns documentation, and the insurer pays. Each leg has its own clock.

A left-to-right timeline of a health insurance claim with four milestones. It begins at the date of loss. Twenty days later, a box labeled Notice of Claim: the insured must give written notice within twenty days, to the insurer or any authorized agent. Fifteen days after notice, a box labeled Claim Forms: the insurer must furnish claim forms within fifteen days, and if it does not, any reasonable written proof of the occurrence, character, and extent of the loss will do. Ninety days after the loss, or after the end of each benefit period, a box labeled Proof of Loss: due within ninety days, with an outer limit of one year. Below the timeline are two summary panels. The first, Time of Payment, says benefits are payable immediately upon receipt of written proof of loss, and periodic benefits must be paid at least monthly with the balance paid at the end of the covered period. The second, Payment of Claims, says death benefits go to the beneficiary or, if none, to the insured's estate; all other benefits go to the insured; and a facility-of-payment clause permits up to one thousand dollars to a relative. — The four claim clocks: 20 days to notify, 15 days for forms, 90 days for proof, then immediate or monthly payment.

Notice of claim

The insured must give the insurer written notice of claim within 20 days after the occurrence or commencement of a covered loss. Notice given to the insurer or to any authorized agent, with enough information to identify the insured, is sufficient. For claims involving continuing disability, notice for later periods is tied to the end of the period for which the insurer is liable.

The provision is protective, not punitive: if notice was not reasonably possible within the time stated, late notice does not automatically destroy the claim.

Claim forms

Once notice arrives, the burden shifts to the company. The insurer must furnish claim forms within 15 days. If it fails to do so, the claimant is deemed to have satisfied the proof-of-loss requirement by submitting written proof of the occurrence, character, and extent of the loss in any reasonable form. The insured is never trapped by the company's own delay.

Proof of loss

Proof of loss is the substantive documentation of the claim.

For periodic payments contingent on continuing loss (such as disability income), proof is due within 90 days after the end of each period for which the insurer is liable.
For all other losses, proof is due within 90 days after the date of loss.
Failure to comply does not invalidate or reduce the claim if it was not reasonably possible to furnish proof in time — but, except in the absence of legal capacity, proof must be furnished no later than one year after it was otherwise due.

The 90-day rule is a deadline with a safety valve; the one-year rule is the outer wall.

Time of payment of claims

Benefits are payable immediately upon receipt of written proof of loss, except for benefits providing periodic payments, which must be paid at least monthly (or at the intervals stated in the policy) as the insurer receives proof, with any unpaid balance paid immediately when proof of the end of the covered period is received.

Payment of claims

This provision names the payee:

Death benefits are paid to the designated beneficiary; if no valid beneficiary exists, to the insured's estate.
All other benefits are paid to the insured.
An optional facility-of-payment clause lets the insurer pay up to $1,000 to a relative by blood or connection by marriage when benefits are payable to an estate or to a minor or otherwise incapacitated person; payment made in good faith discharges the insurer to that extent.
The policy may also allow benefits for hospital, nursing, medical, or surgical services to be paid directly to the provider.

Because these are the mandatory provisions of the Texas health insurance statutes (Tex. Ins. Code Title 8), an insurer may use different wording only if it is at least as favorable to the insured as the statutory language.