§ 26.1-36-04 — Accident and health policy provisions

1. Except as provided in subsection 3, each accident and health insurance policy
delivered or issued for delivery to any person in this state must contain provisions
described in this section. The provisions contained in any policy may not be less
favorable in any respect to the insured or the beneficiary.
a. A provision that the policy, including the endorsements and the attached papers,
if any, constitutes the entire insurance contract and that no change in the policy is
valid until approved by an executive officer of the insurer and unless the approval
is endorsed on or attached to the policy.
b. A provision that no insurance producer has authority to change the policy or to
waive any of its provisions.
c. A provision that the validity of the policy may not be contested except for
nonpayment of premiums, after it has been in force for two years from its date of
issue; and that the validity of the policy may not be contested on the basis of a
statement made relating to insurability by any person covered under the policy
after the insurance has been in force for two years during the person's lifetime
unless the statement is contained in a written instrument signed by the person
making the statement; provided, however, that no such provision precludes the
assertion at any time of defenses based upon the person's ineligibility for
coverage under the policy.
d. A provision specifying the additional exclusions or limitations, if any, applicable
under the policy with respect to a disease or physical condition of a person, not
otherwise excluded from the person's coverage by name or specific description
effective on the date of the person's loss, which existed prior to the effective date

of the person's coverage under the policy. Any such exclusion or limitation may
only apply to a pre-existing disease or physical condition for which medical advice
or treatment was received by the person during the two-year period before the
effective date of the person's coverage. The exclusion or limitation may not apply
to loss incurred or disability commencing after the end of the two-year period
commencing on the effective date of the person's coverage.
e. A provision that the policyholder is entitled to a grace period of thirty-one days for
the payment of any premium due except the first, during which the policy
continues in force, unless the policyholder has given the insurer written notice of
discontinuance in advance of the date of discontinuance and in accordance with
the terms of the policy. The policy may provide that the policyholder is liable to the
insurer for the payment of a pro rata premium for the time the policy was in force
during the grace period.
f. A provision that if any renewal premium is not paid within the time granted the
insured for payment, a subsequent acceptance of premium by the insurer or by
any agent duly authorized by the insurer to accept the premium, without requiring
in connection therewith an application for reinstatement, reinstates the policy;
provided, however, that if the insurer or the agent requires an application for
reinstatement and issues a conditional receipt for the premium tendered, the
policy will be reinstated upon approval of the application by the insurer or, lacking
the approval, upon the forty-fifth day following the date of the conditional receipt
unless the insurer has previously notified the insured in writing of its disapproval
of the application. The policy must provide that the reinstated policy covers only
loss resulting from an accidental injury sustained after the date of reinstatement
and loss due to any sickness that begins more than ten days after the date. The
policy must provide that in all other respects the insured and insurer have the
same rights thereunder as they had under the policy immediately before the due
date of the defaulted premium, subject to any provisions endorsed thereon or
attached thereto in connection with the reinstatement. The provision may include
a statement that any premium accepted in connection with a reinstatement will be
applied to a period for which premium has not been previously paid, but not to
any period more than sixty days prior to the date of reinstatement. This statement
may be omitted from any policy which the insured has the right to continue in
force subject to its terms by the timely payment of premiums until at least age fifty
or in the case of a policy issued after age forty-four, for at least five years from its
date of issue.
g. A provision that written notice of claim must be given to the insurer within twenty
days after the occurrence or commencement of any loss covered by the policy.
Failure to give notice within this time does not invalidate nor reduce any claim if it
is shown not to have been reasonably possible to give the notice and that notice
was given as soon as was reasonably possible.
h. A provision that the insurer will furnish to the person making claim, or to the
policyholder for delivery to such person, the forms usually furnished for filing
proof of loss. If the forms are not furnished before the expiration of fifteen days
after the insurer receives notice of any claim under the policy, the person making
the claim is deemed to have complied with the requirements of the policy as to
proof of loss upon submitting within the time fixed in the policy for filing proof of
loss, written proof covering the occurrence, character, and extent of the loss for
which claims are made.
i. A provision that in the case of claim for loss of time for disability, written proof of
loss must be furnished to the insurer within ninety days after the commencement
of the period for which the insurer is liable, and that subsequent written proof of
continuance of the disability must be furnished to the insurer at such intervals as
the insurer may reasonably require, and that in the case of claim for any other
loss, written proof of loss must be furnished to the insurer within ninety days after
the date of loss. Failure to furnish the proof within this time does not invalidate

nor reduce any claim if it was not reasonably possible to furnish the proof within
that time, provided the proof is furnished as soon as reasonably possible and in
no event, except in the absence of legal capacity of the claimant, later than one
year from the time proof is otherwise required.
j. A provision that all benefits payable under the policy other than benefits for loss
of time will be payable according to the provisions of section 26.1-36-37.1, and
that, subject to due proof of loss, all accrued benefits payable under the policy for
loss of time will be paid not less frequently than monthly during the continuance
of the period for which the insurer is liable, and that any balance remaining
unpaid at the termination of such period will be paid as soon as possible after
receipt of proof of loss.
k. A provision that benefits for loss of life of the person insured will be payable to the
beneficiary designated by the insured person. However, if the policy contains
conditions pertaining to family status, the beneficiary may be the family member
specified by the policy terms. In either case, payment of these benefits is subject
to the provisions of the policy in the event no such designated or specified
beneficiary is living at the death of the insured person. All other benefits of the
policy are payable to the insured person. The policy may also provide that if any
benefit is payable to the estate of a person, or to a person who is a minor or
otherwise not competent to give a valid release, the insurer may pay the benefit,
up to an amount not exceeding five thousand dollars, to any relative by blood or
connection by marriage of the person deemed by the insurer to be equitably
entitled to the benefit.
l. A provision that the insurer may examine the individual for whom claim is made
when and so often as it may reasonably require during the pendency of claim
under the policy and also may make an autopsy in case of death if the autopsy is
not prohibited by law.
m. A provision that no action may be brought to recover on the policy prior to the
expiration of sixty days after proof of loss has been filed in accordance with the
requirements of the policy and that no such action may be brought at all unless
brought within three years from the expiration of the time which proof of loss is
required by the policy.
n. A provision that in the event of the death of an insured, the insurer will refund
within thirty days after notice to the insurer of the insured's death the portion of
the premium, fees, or other sum paid beyond the month of death after deducting
any claim for losses during the current term of the policy. This provision does not
apply if the insurer has a valid defense to the payment of benefits under the
policy.
2. Except as provided in subsection 3, an accident and health insurance policy delivered
or issued for delivery to any person in this state may not contain provisions respecting
the matters described in this subsection unless the provisions in the policy are not less
favorable in any respect to the insured or the beneficiary.
a. A provision that if the insured is injured or contracts sickness after having
changed occupation to one classified by the insurer as more hazardous than that
stated in the policy or while doing for compensation anything pertaining to an
occupation so classified, the insurer will pay only such portion of the indemnities
provided in the policy as the premium paid would have purchased at the rates
and within the limits fixed by the insurer for the more hazardous occupation. If the
insured changes occupation to one classified by the insurer as less hazardous
than that stated in the policy, the insurer, upon receipt of proof of the change of
occupation, will reduce the premium rate accordingly, and will return the excess
pro rata unearned premium from the date of change of occupation or from the
policy anniversary date immediately preceding receipt of proof, whichever is the
more recent. The provision must provide that the classification of occupational
risk and the premium rates will be such as have been last filed by the insurer
before the occurrence of the loss for which the insurer is liable or before date of

proof of change in occupation with the state official having supervision of
insurance in the state where the insured resided at the time the policy was
issued; but if the filing was not required, then the classification of occupational
risk and the premium rates will be those last made effective by the insurer in such
state before the occurrence of the loss or before the date of proof of change in
occupation.
b. A provision that if the age of the insured has been misstated, all amounts payable
under the policy will be such as the premium paid would have purchased at the
correct age.
c. A provision that if an accident or health or accident and health policy or policies
previously issued by the insurer to the insured are in force concurrently therewith,
making the aggregate indemnity for the type of coverage or coverages, in excess
of the maximum limit of indemnity or indemnities, the excess insurance is void
and all premiums paid for the excess will be returned to the insured or to the
insured's estate. In lieu of this type of provision, the policy may provide that
insurance effective at any one time on the insured under the policy and a like
policy or policies in the insurer is limited to the one such policy elected by the
insured, the insured's beneficiary, or the insured's estate, as the case may be,
and the insurer will return all premiums paid for all other such policies.
d. A provision that upon the payment of a claim under the policy, any premium then
due and unpaid or covered by any note or written order may be deducted from
the payment.
e. Subject to chapter 26.1-36.4, a provision that the insurer may cancel the policy at
any time by written notice delivered to the insured, or mailed to the insured's last
address as shown by the records of the insurer, stating when, not less than five
days thereafter, the cancellation is effective; and after the policy has been
continued beyond its original term the insured may cancel the policy at any time
by written notice delivered or mailed to the insurer, effective upon receipt or on
such later date as may be specified in the notice. The provision must provide that
in the event of cancellation, the insurer will return promptly the unearned portion
of any premium paid, and, if the insured cancels, the earned premium will be
computed by the use of the short-rate table last filed in the state where the
insured resided when the policy was issued. The provision must provide that if
the insurer cancels, the earned premium shall be computed pro rata. The
provision must provide that cancellation is without prejudice to any claim
originating prior to the effective date of cancellation.
f. A provision that any provision of the policy which, on its effective date, is in
conflict with the statutes of the state in which the insured resides on such date is
amended to conform to the minimum requirements of such statutes.
g. A provision that the insurer is not liable for any loss to which a contributing cause
was the insured's commission of or attempt to commit a felony or to which a
contributing cause was the insured's being engaged in an illegal occupation.
h. A provision that after the loss-of-time benefit of the policy has been payable for
ninety days, such benefit will be adjusted, as provided under this subdivision, if
the total amount of unadjusted loss-of-time benefits provided in all valid
loss-of-time coverage upon the insured should exceed a percentage of the
insured's earned income as provided in the policy; provided, however, that if the
information contained in the application discloses that the total amount of
loss-of-time benefits under the policy and under all other valid loss-of-time
coverage expected to be effective upon the insured in accordance with the
application for this policy exceeded an alternative percentage of the insured's
earned income as provided in the policy, at the time of the application, such
higher percentage will be used in place of the original percentage provided.
(1) The provision must provide that the adjusted loss-of-time benefit under the
policy for any month will be only such proportion of the loss-of-time benefit
otherwise payable under the policy as (a) the product of the insured's

earned income and the original percent, or, if higher, the alternative
percentage, bears to (b) the total amount of loss-of-time benefits payable for
such month under the policy and all other valid loss-of-time coverage on the
insured, without giving effect to the "overinsurance provision" in this or any
other coverage, less in both (a) and (b) any amount of loss-of-time benefits
payable under other valid loss-of-time coverage which does not contain an
"overinsurance provision".
(2) The provision must provide that in making the computation, all benefits and
earnings will be converted to a consistent basis weekly if the loss-of-time
benefit of the policy is payable weekly, or monthly if the benefit is payable
monthly, or otherwise, based upon the time period. If the numerator of the
foregoing ratio is zero or is negative, no benefit is payable.
(3) The provision must provide that in no event does the provision operate to
reduce the total combined amount of loss-of-time benefits for such month
payable under the policy and all other valid loss-of-time coverage below the
lesser of three hundred dollars and the total combined amount of
loss-of-time benefits determined without giving effect to any "overinsurance
provision", nor operate to increase the amount of benefits payable under the
policy above the amount which would have been paid in the absence of the
provision, nor take into account or operate to reduce any benefit other than
the loss-of-time benefit.
(4) The provision must provide that:
(a) "Earned income", except when otherwise specified, means the greater
of the monthly earnings of the insured at the time disability
commences and the insured's average monthly earnings for a period
of two years immediately preceding the commencement of the
disability, and does not include any investment income or any other
income not derived from the insured's vocational activities.
(b) "Overinsurance provision" includes this type of provision and any
other provision with respect to any loss-of-time coverage which may
have the effect of reducing an insurer's liability if the total amount of
loss-of-time benefits under all coverage exceeds a stated relationship
to the insured's earnings.
(5) This type of provision may be included only in a policy that provides a
loss-of-time benefit which may be payable for at least fifty-two weeks, which
is issued on the basis of selective underwriting of each individual
application, and for which the application includes a question designed to
elicit information necessary either to determine the ratio of the total
loss-of-time benefits of the insured to the insured's earned income or to
determine that such ratio does not exceed the percentage of earnings, not
less than sixty percent, selected by the insurer and inserted in lieu of the
blank factor above. The insurer may require, as part of the proof of claim,
the information necessary to administer this provision. If the application
indicates that other loss-of-time coverage is to be discontinued, the amount
of such other coverage must be excluded in computing the alternative
percentage in the first sentence of the overinsurance provision. The policy
must include a definition of "valid loss-of-time coverage" which may include
coverage provided by governmental agencies and by organizations subject
to regulation by insurance law and by insurance departments of this or any
other state or of any other country or subdivision thereof, coverage provided
for the insured pursuant to any disability benefits statute or any workforce
safety and insurance or employer's liability statute, benefits provided by
labor-management trusteed plans or union welfare plans or by employer or
employee benefit organizations, or by salary continuance or pension
programs, and any other coverage the inclusion of which may be approved.

3. If any requirement of this section is in whole or in part inapplicable to or inconsistent
with the coverage provided by a particular form of policy, the insurer, with the approval
of the commissioner, shall omit from the policy any inapplicable provision or part of a
provision, and shall modify any inconsistent provision or part of the provision in such
manner as to make the provision as contained in the policy consistent with the
coverage provided by the policy.
4. The provisions that are subject to subsections 1 and 2 must be printed in the
consecutive order of the requirements in such subsections or, at the option of the
insurer, any such provision may appear as a unit in any part of the policy, with other
provisions to which it may be logically related, provided the resulting policy is not in
whole or in part unintelligible, uncertain, ambiguous, abstruse, or likely to mislead a
person to whom the policy is offered, delivered, or issued.
5. A provision not subject to this section may not make a policy, or any portion of the
policy, less favorable in any respect to the insured or to the beneficiary than any
provision which is subject to this chapter.
6. Any policy of a foreign or alien insurer, when delivered or issued for delivery to any
person in this state, may contain any provision that is not less favorable to the insured
or the beneficiary than the provisions of this chapter and that is prescribed or required
by the law of the state under which the insurer is organized. Any policy of a domestic
insurer may, when issued for delivery in any other state or country, contain any
provision permitted or required by the laws of such other state or country.