How An Incontestable Clause Affects A Car Insurance Policy
You may not be aware of many important rules and stipulations involving your car insurance policy. You may also not know if an incontestable clause is a part of your policy until there is a dispute in regards to contract validity. After reading this article, you will know what an incontestable clause is and how this amendment can affect your car insurance policy.
An incontestable clause is a policy provision that is common practice not only for car insurance, but other types of insurance policies as well such as life insurance. An incontestable clause upholds an agreement which will not allow an insurance company to dispute the validity of the insured's contract after a certain period of time. With the addition of an incontestable clause, an insurance company cannot deny benefits to someone if they provided incorrect information. Providing incorrect information is known in the insurance industry as misrepresentation. A misrepresentation does not always mean that the person who holds an insurance policy is attempting to knowingly pass a lie off as a truth. Incorrect statements which are made because of carelessness or by mistake also fall into the same category of misrepresentation.
It is common for an incontestable clause to go into effect two years after a policy has been written. An incontestable clause can affect a person's car insurance policy for the better by giving them protection. A person will not be in jeopardy of losing their insurance coverage and this clause protects the insured person from being dropped by the company from the result of misrepresentation. In general, having this benefit as a part of a car insurance policy should not greatly affect the cost of insurance and this benefit can be extremely helpful in guaranteeing that an insurance company fulfills their obligation to a customer.
It should be clearly explained that an incontestable clause is by no means a license to commit insurance fraud. Insurance fraud is always a concern in the industry and preventative measures will be taken by companies to ensure that they are receiving the most accurate information for people who are looking to get a car insurance policy. However, with the addition of the incontestable clause, the consumers have more leverage and breathing room and they can rest assured that they will not be dropped because of misrepresentation, whether it is accidental of intentional. A discovery of proven insurance fraud is a serious offense that can lead to criminal charges.
Although an incontestable clause may not affect your policy at all and you may never have to use it, it may be helpful to know that you cannot be dropped for accidentally providing inaccurate information.
