One of the most important things I learned as a disability contract expert was that disability Plans and policies are not written clear enough to allow the general public complete understanding as to what the language actually means. While insurance companies rush to interpret in their own favor, insureds often attempt to do the same thing.
A good case in point is the insured who tried to fit “Notice of Claim” and “Proof of Loss” provisions into an automatic approval of claim. The “Notice of Claim” provision states that insurers must provide insureds with Claim Forms within 15 days of being requested. This isn’t unusual since every US state has the same law and the policy provision is consistent with that law.
In this particular policy, it stated that if the insurance company failed to provide forms within 15 days, the insured would be presumed to have met the “Proof of Loss” provision. The “Proof of Loss” provision, simply put, states the insured has 90 days after the end of a period of claimed disability to submit “Proof of Loss”.
The insured was very excited since his insurer, Lincoln to be exact, didn’t provide forms within 15 days so that must mean Lincoln has to pay his claim because he is presumed to have met the “Proof of Loss” provision. This is a totally inaccurate interpretation of both Notice of Claim and Proof of Loss provisions.
The precise meaning of the above example is that, “…if Lincoln fails to provide the insured with Claim Forms within 15 days, it cannot deny the claim if the insured does not submit proof of loss within 90 days of a claimed disability. This is really a “nothing burger” since most medical proof of loss is submitted before 90 days anyway.
It does NOT say Lincoln must approve and pay the claim, only that it cannot deny it due to “failure to provide” within 90 days. “Proof of loss” defined, is the sum total of objective paperwork any insured can provide to verify he/she medically has what they say they have for disability purposes.
Nice try, but wrong interpretation. It is indeed unfortunate that the insured in question refused to believe the truth and insisted his interpretation was the right one. He also misinterpreted, and tried to use a Life Insurance definition of pre-disability earnings because it was more favorable than the one cited in the disability policy.
Several of the biggest mistakes I’ve been witness to in my career as a Consultant, are the insureds who absolutely insist their interpretation of policy provisions are the accurate ones.Their next mistakes involve ongoing and continuous “conflicts” with insurers over policy interpretation that is basically wrong.
As in the above example, Lincoln will NOT approve a claim just because it was late in forwarding Claim Forms in 15 days, and the Proof of Loss eventually submitted will still be investigated, and a decision rendered upon the evidence of medical impairment and the insurers discretionary authority.
The lesson to be taken from this is that “contract provisions say themselves” and regardless how hard insureds try sometimes to fit their own claim situations into the policy language, it doesn’t work; and, even more disastrous, it complicates and delays the real management of claims where submission of credible medical impairment is the real priority.
I have never understood why some insureds do not listen to best advice. I’ve had attorneys tell me that some people will even argue with them about policy interpretation, and they don’t get it either. When you add the fact that some insurers look to interpret provisions in their own favor, the two parties to the contract wind up “fussing” over policy provisions that basically say themselves. Mass Mutual is infamous for attempting to enforce contract interpretations in its own favor.
Another example are the ERISA folks who misinterpret “occupation” as “job” when in fact employer group plans do not insured one’s job, only their occupation, two different things.
The important thing is to rely on contract experts who can explain policy provisions in ways that will make sense, and avoid useless conflicts and expensive litigation. Disability policies are not written for the general public’s understanding, and it may be helpful to seek out experts who can explain what the confusing policy provisions mean.
In any event, fighting over a misinterpretation of policy provisions in the course of managing claims is not helpful and will delay the payment of the benefit.
