Legal Definitions - non-contestability clause

A non-contestability clause is a provision in an insurance policy that prevents the insurance company from denying coverage based on fraud or errors in the application when a claim is made by the policyholder. This clause requires the insurance company to challenge any statement in the application within a specific time frame.

Let's say John applies for life insurance and states that he has never smoked. The insurance company approves his application and issues him a policy. A few years later, John dies of lung cancer. The insurance company cannot deny coverage based on the fact that John lied about his smoking history because the non-contestability clause in the policy prevents them from doing so.

Another example could be a person who has a pre-existing medical condition that they did not disclose on their insurance application. If the insurance company does not challenge this within the specified time frame, they cannot deny coverage based on this pre-existing condition when a claim is made.

These examples illustrate how a non-contestability clause protects the policyholder from having their coverage denied based on errors or omissions in their application that were not challenged by the insurance company within the specified time frame.