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What Constitutes A Valid Insurance Policy?

Insurance companies can misconstrue the language in insurance policies—whether unintentionally or on purpose—in order to deny your insurance claim even though you are entitled to coverage. Insurance is a part of everyday life, which we get in order to protect ourselves from the risks inherent in many activities and scenarios, including, but not limited to:

(1) Automobile accidents,
(2) Medical care and emergencies,
(3) Natural disasters,
(4) Property damage, and even
(5) Death.


However, how do you know if your insurance policy is valid, and will ultimately protect you from the vicissitudes of life?

“‘Insurance policies are contracts,’ and thus, they must be ‘interpreted under the same rules governing ordinary contracts.’” Kuhn v. Retirement Bd., Public Employees’ Health Program, 343 P.3d 316, ¶ 4, 2015 UT App 18 (Utah App. 2015)(quoting Gee v. Utah State Ret. Bd., 842 P.2d 919, 920 (Utah Ct. App. 1992)). Therefore, in order to have a valid insurance policy, it must be valid contract, which requires: (1) an offer, (2) acceptance, and (3) consideration (i.e, the value or benefit exchanged between the parties to the agreement). See Terry v. Retirement Bd., Public Employees’ Health Program, 157 P.3d 362, ¶ 10, 2007 UT App 87 (Utah App. 2007).

Furthermore, in relation to an insurance policy, “offer, acceptance, and consideration are shown by the submission of an application by the applicant, approval by the insurance company, and the subsequent payment of premiums.” Id.(quoting Moore v. Prudential Ins. Co., 26 Utah 2d 430, 491 P.2d 227, 228 (1971). Thus, in order to have a valid insurance policy, you must apply for insurance, be approved by the insurance company, and pay the corresponding premiums.

Whether or not your insurance policy will protect you from the anticipated risks depends on what is delineated in the policy. In other words, your rights and obligations, and the insurance’s company’s rights and obligations, are determined by the language in the insurance policy. See Kuhn, 343 P.3d 316, ¶ 4 (Utah App. 2015). Therefore, it is wise to regularly review insurance policies to ensure you have adequate coverage.

Due to the complexity of insurance policies, and the great resources of insurance companies, you need an experienced attorney who knows insurance law. At Head Law, we are experienced with insurance policies and denied insurance claims, and will take on the fight against the insurance companies to protect you and your family’s rights.