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Contestability

Contestability refers to the period of time after an insurance policy is issued during which the insurer has the right to review and investigate the accuracy of the information provided in the application. If the insurer discovers that any information was omitted, misstated, or misrepresented during this period, it can deny a claim or void the policy.

How It Works

In most Canadian life and health insurance policies, the contestability period lasts two years from the date the policy takes effect. During this window, the insurer can contest a claim based on errors or nondisclosure in the application, even if the omission was unintentional. If a claim falls within this period, the insurer must still honour the contract, but it reserves the right to deny payment when it finds false information on the application. Importantly, the reason for the loss does not need to be related to the misrepresentation; an unrelated cause can still lead to a denied claim if a material omission is found. Once the contestability period has expired, the policy generally becomes incontestable except in cases of fraud. Canadian courts have upheld the rescission of policies for misrepresentation in the first two years following coverage inception where applicants failed to disclose material information.

Example:

Suppose a Canadian applies for a personal health or critical illness policy and forgets to disclose a past medical condition during the application. If they then file a claim within the first two years, the insurer can review the original application during the contestability period. If it determines the omitted condition was material to its underwriting decision, it may deny the claim, even when the claim itself is unrelated to that condition.

What to Watch For:

Because the contestability period allows an insurer to contest a claim over even unintentional errors or nondisclosure, accuracy on your application matters greatly. An insurance company may deny a life or health insurance claim within this period, and an unrelated cause of loss can still be denied if a material omission is found. If your claim is denied and you want to discuss it, you can contact the head office of your insurance company.

Related Terms

Misrepresentation

Misrepresentation occurs when false, incomplete, or misleading information is provided to an insurance company, either intentionally or unintentionally, during the application process or while a policy is active. It can involve misstating or omitting facts related to medical history, lifestyle, occupation, or any other information that could influence the insurer’s decision to issue coverage or determine premiums.

Certificate of Insurance

A certificate of insurance is an official document issued by an insurance company that summarizes the key details of your coverage. It serves as proof that you are insured and outlines the essential terms of your policy, including the type of coverage, effective dates, benefit limits, exclusions, and any dependents or beneficiaries listed under the plan.

Claim Submission Deadline

The claim submission deadline is the final date by which an insured person must submit a claim to their insurance company for reimbursement of eligible expenses. After this date, the insurer is not obligated to pay the claim, even if the expense itself would have been covered. This deadline ensures timely processing, accurate recordkeeping, and proper financial reporting for both the insurer and the policyholder.

Contract

A contract in insurance is the legally binding agreement between the policyholder and the insurance company that outlines the terms, conditions, and obligations of both parties. It specifies what coverage is provided, what benefits are payable, how premiums are calculated, and what exclusions or limitations apply. The insurance contract serves as the foundation for determining how claims are handled and what rights and responsibilities exist under the policy.

Group Policyholder

A group policyholder is the organization or employer that owns and administers a group insurance plan on behalf of its members or employees. The group policyholder holds the master policy issued by the insurer, manages enrollment, collects premiums, and ensures that the plan complies with contractual and regulatory requirements. In most cases, the policyholder is the employer, while the insured members are the employees and their eligible dependents.

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