Illinois Law Prohibits Discretionary Clauses in Insurance Contracts
If you’ve had a legitimate insurance claim denied in Illinois — whether a health insurance claim or a disability insurance claim — then you may find that the insurer justifies their denial on the basis of a discretionary clause written into the policy.
Discretionary clauses can vary in function somewhat, but as a general rule, they give the insurer the ability to interpret (in accordance with their own standards) the terms of the contract. This type of “discretionary” power gives the insurer an enormous advantage when it comes time to determine whether or not to award health or disability benefits.
Discretionary Clauses are Prohibited in Health and Disability Insurance Policies
Fortunately for policyholders in Illinois, the state has banned discretionary clauses from health and disability insurance policies — the courts have determined that giving an insurer discretionary authority when interpreting the terms of an insurance policy would put the policyholder in a highly-disadvantageous position.
For example, an insurer would be prohibited from making a decision on whether to accept or deny your disability insurance claim due to some ambiguous discretionary standard. A provision that allowed the insurer to deny a claim “at their discretion” (or using functionally similar language) would therefore not be enforceable. You could challenge the use of discretionary authority by the insurer, and have a court re-examine the legitimacy of your insurance claim under an objective “de novo” standard of review.
- Related Article: 5 FAQs About Private Disability Insurance Claims
Courts Must Apply the De Novo Standard of Review
When a court defers to the standards applied by an insurer (in making a decision relating to an insurance claim), they are applying the “deferential” standard of review. By contrast, the “de novo” standard of review is one in which the court considers whether your insurance claim qualifies for benefits without paying any heed to the interpretation of the policy terms by the insurer. In other words, “de novo” review is akin to starting with a blank slate. The court will not give weight to the decision of the insurer. They will examine the evidence in an unbiased manner.
In Illinois, the law not only prohibits the inclusion of discretionary language in health and disability insurance policies, but also requires that courts apply de novo standard of review when evaluating claim denials. In fact, here at Bryant Legal Group, P.C., our attorneys have been involved at the cutting-edge of “de novo” standard of review case law in the state of Illinois.
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If you’ve had your insurance claim wrongfully denied by your insurer, then you may be entitled to appeal the denial, or — in certain circumstances — pursue litigation against the insurer in order to recover your rightful benefits.
When challenging the decision of an insurer in Illinois, it’s worth noting that the reviewing court is required to apply the “de novo” standard of review, even if the insurance policy contains a discretionary clause (which is illegal in the state of Illinois). In order to successfully navigate this complicated legal landscape, we encourage you to get in touch with an experienced Chicago insurance attorney here at Bryant Legal Group, P.C., who can advocate on your behalf through every step of the litigation process.
Our attorneys have represented numerous policyholder-clients in a range of disputes with their insurers, in both the health insurance and disability insurance contexts. We are intimately familiar with worst tendencies of insurers — such as their willingness to include ambiguous and damaging provisions in the insurance contract — and are well-positioned to challenge their conduct in a court of law.
Call (312) 561-3010 today to schedule a free consultation with one of the skilled attorneys here at Bryant Legal Group, P.C.
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