The Insurance Contract

Del. Code tit. 18, ch. 27
in effect

Del. Code tit. 18, § 2701 Scope of chapter.

This chapter applies to all insurance contracts and annuity contracts other than: (1) Reinsurance; (2) Policies or contracts not issued for delivery in this State nor delivered in this State; (3) Wet marine and transportation insurance; and (4) Funding agreements.

Del. Code tit. 18, § 2702 “Policy” defined.

“Policy” means the written contract of or written agreement for or effecting insurance, by whatever name called, and includes all clauses, riders, endorsements and papers which are a part thereof.

Del. Code tit. 18, § 2703 “Premium” defined.

“Premium” is the consideration for insurance by whatever name called. Any “assessment,” or any “membership,” “policy,” “survey,” “inspection,” “service” or similar fee or other charge in consideration for an insurance contract is deemed part of the premium.

Del. Code tit. 18, § 2704 Insurable interest; personal insurance.

(a) Any individual of competent legal capacity may procure or effect an insurance contract upon that individual's own life or body for the benefit of any person, but no person shall procure or cause to be procured any insurance contract upon the life or body of another individual unless the benefits under such contract are payable to the individual insured or that individual's personal representatives or to a person having, at the time when such contract was made, an insurable interest in the individual insured. (b) If the beneficiary, assignee or other payee under any contract made in violation of this section receives from the insurer any benefits thereunder accruing upon the death, disablement or injury of the individual insured, the individual insured or the individual's executor or administrator, as the case may be, may maintain an action to recover such benefits from the person so receiving them. (c) “Insurable interest” as to such personal insurance means that every individual has an insurable interest in the life, body and health of such individual and a person has an insurable interest in the life, body and health of other individuals as follows: (1) In the case of individuals related closely by blood or by law, a substantial interest engendered by love and affection; (2) In the case of other persons, a lawful and substantial economic interest in having the life, health or bodily safety of the individual insured continue, as distinguished from an interest which would arise only by, or would be enhanced in value by, the death, disablement or injury of the individual insured; (3) An employer providing life, health, disability, retirement or similar benefits to some or all of its employees or the employees of its affiliates, or their dependents or beneficiaries, has an insurable interest in the lives of all of its employees or the employees of its affiliates. The trustee of a trust established by an employer substantially for the benefit of the employer, or for the benefit of some or all of the employees in which such employer has an insurable interest, or the dependents or beneficiaries of such employees, has the same insurable interest in the life of such employees as does the employer; (4) An individual heretofore or hereafter party to a contract or option for the purchase or sale of an interest in a business partnership or firm or of shares of stock of a corporation or of an interest in such shares, has an insurable interest in the life of each individual party to such contract and for the purpose of such contract only, in addition to any insurable interest which may otherwise exist as to the life of such individual; and (5) The trustee of a trust created and initially funded by an individual has an insurable interest in the life of that individual and the same insurable interest in the life of any other individual as does any person who is treated as the owner of such trust for federal income tax purposes without regard to: a. The identity of the trust beneficiaries; b. Whether the identity of the trust beneficiaries changes from time to time; and c. The means by which any trust beneficiary acquires a beneficial interest in the trust. The trustee of a trust has the same insurable interest in the life of any individual as does any person with respect to proceeds of insurance on the life of such individual (or any portion of such proceeds) that are allocable to such person’s interest in such trust. If multiple beneficiaries of a trust have an insurable interest in the life of the same individual, the trustee of such trust has the same aggregate insurable interest in such life as such beneficiaries with respect to proceeds of insurance on the life of such individual (or any portion of such proceeds) that are allocable in the aggregate to such beneficiaries’ interest in the trust; (6) A person obligated to make a payment on the death of an individual to or for the benefit of a person who is designated by such individual has an insurable interest in the life of such individual. For purposes of this section, group insurance premiums paid on an experience-rated basis shall be treated as payments for the benefit of the beneficiary of such policy. (d) An insurer shall be entitled to rely upon all statements, declarations and representations made by an applicant for insurance relative to the insurable interest of the applicant in the insured, and no insurer shall incur legal liability except as set forth in the policy by virtue of any untrue statements, declarations or representations so relied upon in good faith by the insurer. (e) As used in this section and in § 2708(4) of this title, and § 702(c) of this title, except as provided in § 702(c)(3) of this title: (1) The term “employee” shall include any and all directors, officers, partners, employees and retired employees and it shall include any other former employees but only for the purpose of replacing existing life insurance policies that will be surrendered in exchange for new life insurance policies in an amount not exceeding the insurance being surrendered, except that the amount of new life insurance may exceed the insurance being surrendered to the extent application of the cash surrender value from the old insurance as a premium under the new life insurance contract requires a larger amount of insurance to qualify as life insurance, and not be treated as a modified endowment contract, for federal income tax purposes. (2) The term “employer” shall include corporations, limited liability companies or partnerships, statutory trusts, business trusts and other business entities, including associations of employers, and their affiliates. (3) An “employer-owned life insurance policy” means an insurance contract for which an insurable interest exists under paragraph (c)(3) of this section, issued for delivery in this State and procured or effected by any employer, or a trust established by an employer, which employer as defined herein, is incorporated, registered or qualified to do business in this State and has at least 50 employees. (4) A “trust-owned life insurance policy” means an insurance contract for which an insurable interest exists under paragraph (c)(3) or (c)(5) of this section, issued for delivery in this State to a trust established under the laws of this State and having a trustee with its principal place of business in this State, or to an entity formed under the laws of this State that is wholly owned by such a trust, which entity is classified as a disregarded entity for federal income tax purposes. (5) The term “trust” includes without limitation a business trust. (6) The term “affiliate” shall have the same meaning as set forth in § 5001(1) of this title. (f) The insurable interest of an employer or trustee under this section shall be conveyed automatically to another employer or to the trustee of a trust established by such other employer substantially for its benefit which has acquired by purchase, merger or otherwise all or part of the first employer’s business. An employer or the trustee of a trust established by such employer substantially for its own benefit or substantially for the benefit of its employees or their dependents may exchange any policy of insurance issued to itself or to another employer or the trustee of a trust established by such other employer substantially for its own benefit from which the exchanging employer has acquired by purchase, merger or otherwise all or part of such other employer’s business for a new policy of insurance issued to itself without establishing a new insurable interest at the time of such exchange. (g) The insurable interests recognized in this section may exist cumulatively or concurrently as appropriate to the relationships between the individual insured and the person having the interest in such individual’s life. The existence of an insurable interest with respect to an employer-owned life insurance policy or trust-owned life insurance policy shall be governed by this section without regard to an insured’s state of residency or location. An employer-owned life insurance policy, if delivered to the employer’s principal place of business in this State or to its registered agent in this State; or in the case of a policy issued to a trust established by an employer, if delivered to the place of business in Delaware of the trustee of said trust; and a trust-owned life insurance policy, if delivered to the place of business in Delaware of the trustee of said trust; shall be deemed to have been delivered in this State. The parties to an employer-owned life insurance policy may arrange for delivery in this State by means other than the method described in the preceding sentence. An employer-owned life insurance policy may be issued on an individual or group basis, and any group policy shall be exempt from Chapter 31 of this title. A group insurance policy issued to an employer for the benefit of persons other than the employer, as permitted by § 3102 of this title, shall not constitute an employer-owned life insurance policy.

Del. Code tit. 18, § 2705 Insurable interest; exception when certain institutions designated beneficiary.

(a) Life insurance contracts may be entered into in which the person paying the consideration for the insurance has no insurable interest in the life of the individual insured, where charitable, benevolent, educational or religious institutions, or their agencies, are designated irrevocably as the beneficiaries thereof. (b) In making such contracts the person paying the premium shall make and sign the application therefor as owner and shall designate a charitable, benevolent, educational or religious institution, or an agency thereof, irrevocably as the beneficiary or beneficiaries of such contract. The application shall be signed also by the individual whose life is to be insured. (c) Nothing in this section shall be deemed to prohibit any combination of the applicant, premium payer, owner and beneficiary from being the same person. (d) Such a contract shall be valid and binding among the parties thereto, notwithstanding the absence otherwise of an insurable interest in the life of the individual insured.

Del. Code tit. 18, § 2706 Insurable interest; property.

(a) No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss. (b) “Insurable interest” as used in this section means any actual, lawful and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction or pecuniary damage or impairment. (c) The measure of an insurable interest in property is the extent to which the insured might be directly or indirectly damnified by loss, injury or impairment thereof.

Del. Code tit. 18, § 2707 Power to contract; purchase of insurance and annuities by minors.

(a) Any person of competent legal capacity may contract for insurance. (b) Any minor not less than 15 years of age, with the consent of parent or guardian, if any, unless otherwise emancipated, may, notwithstanding his or her minority, contract for or own annuities or insurance or affirm by novation or otherwise preexisting contracts for annuities or insurance upon his or her own life, body, health, property, liabilities or other interests or on the persons of another in whom the minor has an insurable interest. Such a minor shall, notwithstanding such minority, be deemed competent to exercise all rights and powers with respect to or under: (1) Any contract for annuity or for insurance upon his or her own life, body or health; or (2) Any contract such minor effected upon his or her own property, liabilities or other interests; or (3) Any contract effected or owned by the minor on the person of another as might be exercised by a person of full legal age and may at any time surrender his or her interest in any such contracts and give valid discharge for any benefit accruing or money payable thereunder. Such a minor shall not, by reason of his or her minority, be entitled to rescind, avoid or repudiate the contract, nor to rescind, avoid or repudiate any exercise of a right or privilege thereunder, except that such a minor not otherwise emancipated shall not be bound by any unperformed agreement to pay by promissory note or otherwise any premium on any such annuity or insurance contract. (c) Any annuity contract or policy of life or disability insurance procured by or for a minor under subsection (b) of this section above shall be made payable either to the minor or his or her estate or to a person having an insurable interest in the life of the minor.

Del. Code tit. 18, § 2708 Consent of insured; life, health insurance.

No life or health insurance contract upon an individual, except a contract of group life insurance or of group or blanket health insurance, shall be made or effectuated unless at the time of the making of the contract the individual insured, being of competent legal capacity to contract, applies therefor or has consented thereto in writing, except in the following cases: (1) A spouse may effectuate such insurance upon the other spouse; (2) Any person having an insurable interest in the life of a minor, or any person upon whom a minor is dependent for support and maintenance may effectuate insurance upon the life of or pertaining to such minor; (3) Family policies may be issued insuring any 2 or more members of a family on an application signed by either parent, a stepparent or by a husband or wife; (4) An employer, or the trustee of a trust described in § 2704(c)(3) of this title, may effectuate insurance under an employer-owned life insurance policy, as defined in § 2704(e) of this title, upon any employee in whom it has an insurable interest, and the employer or trustee, as the case may be, shall not be required to notify employees of the effectuation of such insurance or obtain their consent. The insurer and any investment sub-advisors shall use best efforts to direct securities transactions relating to such employer-owned variable life insurance policies utilizing separate accounts, through a securities agent licensed and located in this State, as opposed to a securities agent licensed and located in another state, unless a better price for the identical security (securities) is available through the securities agent located in that other state.

Del. Code tit. 18, § 2709 Alteration of application, life and health insurance.

No alteration of any written application for any life or health insurance policy shall be made by any person other than the applicant without his or her written consent, except that insertions may be made by the insurer, for administrative purposes only, in such manner as to indicate clearly that such insertions are not to be ascribed to the applicant.

Del. Code tit. 18, § 2710 Application as evidence.

(a) No application for the issuance of any life or health insurance policy or annuity contract shall be admissible in evidence in any action relative to such policy or contract, unless a true copy of the application was attached to or otherwise made a part of the policy or contract when issued. This provision shall not apply to industrial life insurance policies. (b) If any policy of life or health insurance delivered in this State is reinstated or renewed and the insured or the beneficiary or assignee of the policy makes written request to the insurer for a copy of the application, if any, for such reinstatement or renewal, the insurer shall, within 30 days after receipt of such request at its home office, deliver or mail to the person making such request a copy of such application reproduced by any legible means. If such copy is not so delivered or mailed after having been so requested, the insurer shall be precluded from introducing the application in evidence in any action or proceeding based upon or involving the policy or its reinstatement or renewal. In the case of such a request from a beneficiary, the time within which the insurer is required to furnish a copy of such application shall not begin to run until after receipt of evidence satisfactory to the insurer of the beneficiary’s vested interest in the policy or contract. (c) As to kinds of insurance other than life or health insurance, no application for insurance signed by or on behalf of the insured shall be admissible in evidence in any action between the insured and the insurer arising out of the policy so applied for, if the insurer has failed, at the expiration of 30 days after receipt by the insurer of written demand therefor by or on behalf of the insured, to furnish to the insured a copy of such application reproduced by any legible means.

Del. Code tit. 18, § 2711 Representations in applications.

All statements and descriptions in any application for an insurance policy or annuity contract by or in behalf of the insured or annuitant shall be deemed to be representations and not warranties. Misrepresentations, omissions, concealment of facts and incorrect statements shall not prevent a recovery under the policy or contract unless either: (1) Fraudulent; or (2) Material either to the acceptance of the risk or to the hazard assumed by the insurer; or (3) The insurer in good faith would either not have issued the policy or contract, or would not have issued it at the same premium rate or would not have issued a policy or contract in as large an amount or would not have provided coverage with respect to the hazard resulting in the loss if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise.

Del. Code tit. 18, § 2712 Filing, approval of forms.

(a) No basic insurance policy or annuity contract, form, or application form where written application is required and is to be made a part of the policy or contract or printed rider or endorsement form or form of renewal certificate shall be delivered or issued for delivery in this State, unless the form has been filed with the Commissioner. This provision shall not apply to surety bonds or to specially rated inland marine risks nor to policies, riders, endorsements, or forms of unique character designed for and used with relation to insurance upon a particular subject or which relate to the manner of distribution of benefits or to the reservation of rights and benefits under life or health insurance policies and are used at the request of the individual policyholder, contract holder, or certificate holder. With respect to group and blanket health insurance policies issued and delivered to a trust or to an association outside of this State and covering persons resident in this State, the group certificates to be delivered or issued for delivery in this State shall be filed with the Commissioner pursuant to this section provided, however, that this requirement shall not apply to an association group having received a waiver from the Commissioner upon a finding that the association group meets the qualifications set forth in § 3506 of this title. In the case of forms for use in property, marine (other than wet marine and transportation insurance), casualty, surety and title insurance coverages, the filing required by this subsection may be made by rating organizations on behalf of their members and subscribers, but this provision shall not be deemed to prohibit any such member or subscriber from filing any such forms on its own behalf. (b) Every such filing shall be made not less than 30 days in advance of any such delivery. At the expiration of such 30 days the form so filed shall be effective unless prior thereto it has been affirmatively acknowledged or disapproved by order of the Commissioner. Acknowledgment of any such form by the Commissioner shall constitute a waiver of any unexpired portion of such waiting period. The Commissioner may extend by not more than an additional 30 days the period within which he or she may so affirmatively acknowledge or disapprove any such form, by giving notice to the insurer of such extension before expiration of the initial 30 days period. At the expiration of any such period as so extended, and in the absence of such prior affirmative acknowledgment or disapproval, any such form may be placed in use. The Commissioner may at any time, after notice and for cause shown, withdraw any such acknowledgment or effectiveness. (c) Any order of the Commissioner disapproving any such form or withdrawing a previous effectiveness shall state the grounds therefor and the particulars thereof in such detail as reasonably to inform the insurer thereof. Any such withdrawal of a previously effective form shall be operative at expiration of such period, not less than 30 days after the giving of notice of withdrawal, as the Commissioner shall in such notice prescribe. (d) The Commissioner may, by order, exempt from the requirements of this section, for so long as he or she deems proper, any insurance document or form or type thereof as specified in such order, to which, in his or her opinion, this section may not practicably be applied, or the filing and review of which are, in his or her opinion, not desirable or necessary for the protection of the public. (e) Appeals from orders of the Commissioner disapproving any such form or withdrawing a previous effectiveness may be taken as provided in §§ 327-333 of this title.

Del. Code tit. 18, § 2713 Grounds for disapproval.

The Commissioner shall disapprove any form filed under § 2712 of this title, or withdraw any previous effectiveness thereof, only on 1 or more of the following grounds: (1) If it is in any respect in violation of or does not comply with this title. (2) If it contains or incorporates by reference, where such incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract. (3) If it has any title, heading or other indication of its provisions which is misleading. (4) If the benefits provided therein are unreasonable in relation to the premium charged, or if it contains any unjust, unfair or inequitable provision or provisions. (5) If it contains a provision or provisions such as to encourage misrepresentation.

Del. Code tit. 18, § 2714 Standard provisions.

(a) Insurance contracts shall contain such standard or uniform provisions as are required by the applicable provisions of this title pertaining to contracts of particular kinds of insurance. The Commissioner may waive the required use of a particular provision in a particular insurance policy form if: (1) He or she finds such provision unnecessary for or unrelated to the protection of the insured and inconsistent with the purposes of the policy; and (2) The policy is otherwise approved by him or her. (b) No policy shall contain any provision inconsistent with or contradictory to any standard or uniform provision used or required to be used, but the Commissioner may approve any substitute provision which is, in his or her opinion, not less favorable in any particular to the insured or beneficiary than the provisions otherwise required. (c) In lieu of the provisions required by this title for contracts for particular kinds of insurance, substantially similar provisions required by the law of the domicile of a foreign or alien insurer may be used when approved by the Commissioner. (d) A policy issued by a domestic insurer for delivery in another jurisdiction may contain any provision required or permitted by the laws of such jurisdiction.

Del. Code tit. 18, § 2715 Charter or bylaw provisions.

No policy shall contain any provision purporting to make any portion of the charter, bylaws or other constituent document of the insurer (other than the subscriber’s agreement or power of attorney of a reciprocal insurer) a part of the contract unless such portion is set forth in full in the policy. Any policy provision in violation of this section shall be invalid.

Del. Code tit. 18, § 2716 Execution of policies.

(a) Every insurance policy shall be executed in the name of and on behalf of the insurer by its officer, attorney-in-fact, employee or representative duly authorized by the insurer. (b) A facsimile signature of any such executing individual may be used in lieu of an original signature. (c) No insurance contract heretofore or hereafter issued and which is otherwise valid shall be rendered invalid by reason of the apparent execution thereof on behalf of the insurer by the imprinted facsimile signature of an individual not authorized so to execute as of the date of the policy.

Del. Code tit. 18, § 2717 Underwriters’ and combination policies.

(a) Two or more authorized insurers may jointly issue, and shall be jointly and severally liable on, an underwriters’ policy bearing their names. Any 1 insurer may issue policies in the name of an underwriter’s department and such policy shall plainly show the true name of the insurer. (b) Two or more insurers may, with the approval of the Commissioner, issue a combination policy which shall contain provisions substantially as follows: (1) That the insurers executing the policy shall be severally liable for the full amount of any loss or damage, according to the terms of the policy, or for specified percentages or amounts thereof, aggregating the full amount of insurance under the policy; and (2) That service of process, or of any notice or proof of loss required by such policy, upon any of the insurers executing the policy shall constitute service upon all such insurers. (c) This section shall not apply to cosurety obligations.

Del. Code tit. 18, § 2718 Validity and construction of noncomplying forms.

(a) A policy hereafter delivered or issued for delivery to any person in this State in violation of this title but otherwise binding on the insurer shall be held valid, but shall be construed as provided in this title. (b) Any condition, omission or provision not in compliance with the requirements of this title and contained in any policy, rider or endorsement hereafter issued and otherwise valid shall not thereby be rendered invalid but shall be construed and applied in accordance with such condition, omission or provision as would have applied had the same been in full compliance with this title.

Del. Code tit. 18, § 2719 Delivery of policy.

In event the original policy is delivered or is so required to be delivered to or for deposit with any vendor, mortgagee or pledgee of any motor vehicle, and in which policy any interest of the vendee, mortgagor or pledgor in or with reference to such vehicle is insured, a duplicate of such policy setting forth the name and address of the insurer, insurance classification of vehicle, type of coverage, limits of liability, premiums for the respective coverages and duration of the policy, or memorandum thereof containing the same such information, shall be delivered by the vendor, mortgagee or pledgee to each such vendee, mortgagor or pledgor named in the policy or coming within the group of persons designated in the policy to be so included. If the policy does not provide coverage of legal liability for injury to persons or damage to the property of third parties, a statement of such fact shall be printed, written or stamped conspicuously on the face of such duplicate policy or memorandum. This section does not apply to inland marine floater policies.

Del. Code tit. 18, § 2720 Assignability.

(a) A policy and its rights and benefits may be assignable or not assignable, as provided by its terms. (b) Subject to its terms relating to assignability, a life or health insurance policy and its rights and benefits, whether heretofore or hereafter issued, under the terms of which the beneficiary may be changed upon the sole request of the insured or owner, may be assigned either by pledge or transfer of title by an assignment executed by the insured or owner alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. (c) Subject to its terms relating to assignability, a property insurance policy, whether heretofore or hereafter issued, under the terms of which the policy and its rights and benefits are assignable, may provide that the rights and benefits under the insurance policy may only be assigned to a person who has the legal authority to represent the named insured and may explicitly prohibit assignment of rights and benefits to any other person, including a property repair contractor. For purposes of this subsection, having “legal authority to represent the named insured” includes the person named by the named insured as having the named insured’s power of attorney, the person who is the named insured’s licensed public adjuster, or any other comparable person. Property repair contractors operating in this State may not subvert the public adjuster licensing requirements in § 1751 of this title through the acquisition of a power of attorney from the named insured. (d) Any assignment pursuant to subsection (b) or (c) of this section shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy or its rights and benefits in accordance with the terms of the assignment until the insurer has received at its home office written notice of termination of the assignment or pledge or written notice by or on behalf of some other person claiming some interest in the policy or its rights and benefits in conflict with the assignment.

Del. Code tit. 18, § 2720A Property insurance for beneficiary of transfer on death deed.

(a) As used in this section: (1) “Beneficiary” means as defined under § 202 of Title 25. (2) “Insurable interest” means an insured’s interest in real property, concerning which the insured is entitled to the benefits of insurance coverage under a policy. (3) “Insured” means a person that is entitled to the benefits of a policy. (4) “Property” means as defined under § 202 of Title 25. (5) “Transfer on death deed” means as defined under § 202 of Title 25. (6) “Transferor” means as defined under § 202 of Title 25. (b) Notwithstanding § 2720 of this title and subject to subsection (c) of this section, a beneficiary of a transfer on death deed is an insured to the extent of the transferor’s insurable interest in property that the beneficiary has acquired or received by a transfer on death deed. (c) Except as provided in subsections (d) and (e) of this section, for 60 days immediately following the death of the transferor, a beneficiary of a transfer on death deed is an insured under a policy insuring the property of the transferor. At the time of the transferor’s death, and for 60 days after the transferor’s death, the beneficiary succeeds to the rights and obligations of the transferor under the policy to the extent of the transferor’s insurable interest in property that the beneficiary has acquired or received by a transfer on death deed. (d) (1) Subject to paragraph (d)(2) of this section, if a policy has an expiration date that is less than 60 days after the death of the transferor, insurance coverage continues for 30 days or until the expiration date of the policy, whichever is later. (2) If the later date under paragraph (d)(1) of this section extends beyond the expiration date of the policy, insurance coverage continues only if the beneficiary has paid the premium applicable to the coverage extending beyond the expiration date. (e) If a beneficiary obtains a policy insuring the property that the beneficiary acquired or received by a transfer on death deed, the beneficiary is not an insured under subsection (c) of this section. (f) This section applies to a loss or damage incurred on or after December 4, 2025. (g) This section applies regardless of whether policy was created before, on, or after December 4, 2025, unless the application of this section to the policy would do any of the following: (1) For a policy issued before December 4, 2025, give a right to a beneficiary that the beneficiary was not reasonably intended to have, other than the beneficiary’s right to insurance coverage until the time limitation under subsection (c) or (d) of this section. (2) For a policy issued at any time, relieve a beneficiary from a duty or liability imposed on the transferor by the terms of the policy.

Del. Code tit. 18, § 2721 Payment discharges insurer.

Whenever the proceeds of or payments under a life or health insurance policy or annuity contract heretofore or hereafter issued become payable in accordance with the terms of such policy or contract, or the exercise of any right or privilege thereunder, and the insurer makes payment thereof in accordance therewith or in accordance with any written assignment thereof, the person then designated as being entitled thereto shall be entitled to receive such proceeds or payments and to give full acquittance therefor and such payments shall fully discharge the insurer from all claims under the policy or contract unless, before payment is made, the insurer has received at its home office written notice by or on behalf of some other person that such other person claims to be entitled to such payment or some interest in the policy or contract.

Del. Code tit. 18, § 2722 Forms for proof of loss to be furnished.

An insurer shall furnish, upon written request of any person claiming to have a loss under an insurance contract issued by such insurer, forms of proof of loss for completion by such person, but such insurer shall not, by reason of the requirement so to furnish forms, have any responsibility for or with reference to the completion of such proof or the manner of any such completion or attempted completion.

Del. Code tit. 18, § 2724 Claims administration not waiver.

Without limitation of any right or defense of an insurer otherwise, none of the following acts by or on behalf of an insurer shall be deemed to constitute a waiver of any provision of a policy or of any defense of the insurer thereunder: (1) Acknowledgment of the receipt of notice of loss or claim under the policy; (2) Furnishing forms for reporting a loss or claim, for giving information relative thereto, or for making proof of loss, or receiving or acknowledging receipt of any such forms or proofs completed or uncompleted; (3) Investigating any loss or claim under any policy or engaging in negotiations looking toward a possible settlement of any such loss or claim.

Del. Code tit. 18, § 2726 Exemption of proceeds, health insurance.

Except as may otherwise be expressly provided by the policy or contract, the proceeds or avails of all contracts of health insurance and of provisions providing benefits on account of the insured’s disability which are supplemental to life insurance or annuity contracts heretofore or hereafter effected shall be exempt from all liability for any debt of the insured and from any debt of the beneficiary existing at the time the proceeds are made available for his or her use.

Del. Code tit. 18, § 2727 Exemption of proceeds—Group insurance.

(a) A policy of group life insurance or group health insurance or the proceeds thereof payable to the individual insured or to the beneficiary thereunder, shall not be liable, either before or after payment, to be applied by any legal or equitable process to pay any debt or liability of such insured individual or his or her beneficiary or of any other person having a right under the policy. (b) This section shall not apply to group insurance issued pursuant to this title to a creditor covering his or her debtors to the extent that such proceeds are applied to payment of the obligation for the purpose of which the insurance was so issued.

Del. Code tit. 18, § 2729 Retention of proceeds of policy by company.

(a) Any life insurer shall have power to hold payment of proceeds, as shall have been agreed to in writing by the insurer and the insured or beneficiary. The insurer shall not be required to segregate funds so held but may hold them as a part of its general corporate assets. (b) The provisions of this section shall not impair or affect any rights of creditors under §§ 2725-2728 of this title.

Del. Code tit. 18, § 2730 Collection of overpayments by health insurers and health plans.

(a) Other than recovery for duplicate payments, a health insurer or health plan, whenever it engages in overpayment recovery efforts, shall provide written notice to the health-care provider that identifies the error made in the processing or payment of the claim and justifies the overpayment recovery. (b) A health insurer or health plan shall provide a health-care provider with the opportunity to challenge an overpayment recovery, including the sharing of claims information, and shall establish written policies and procedures for health-care providers to follow to challenge an overpayment recovery. (c) A health insurer or health plan may not initiate overpayment recovery efforts more than 12 months after the original payment for the claim was made. For purposes of this subsection, overpayment recovery efforts are “initiated” when a health insurer or health plan first identifies an error in the original payment for the claim through an initial audit report or similar communication delivered to the health-care provider. No such time limit applies to overpayment recovery efforts which are any of the following: (1) Based on fraud, abuse, or other intentional misconduct as indicated by physical review or review of claims data or statements. (2) Required by, or initiated at the request of, a self-insured plan. (3) Required by a state or federal government plan. (d) Nothing in this section shall be deemed to limit a health insurer’s or health plan’s right to pursue recovery of overpayments that occurred prior to June 14, 2018, where the health insurer or health plan has provided the health-care provider with notice of such recovery efforts prior to June 14, 2018. (e) For purposes of this section “health insurer” shall mean any entity or plan that provides health insurance in this State. Such terms shall include an insurance company, health service corporation, managed care organization, health maintenance organization, and any other entity providing a plan of health insurance or health benefits subject to state insurance regulation. “Health insurer” shall also include any third-party administrator or other entity that adjusts, administers or settles claims in connection with health benefit plans. (f) For purposes of this section, “health plan” shall mean any hospital or medical policy or certificate, major-medical expense insurance, health service corporation subscriber contract, health maintenance organization subscriber contract, managed care organization subscriber contract, dental or vision plan. “Health plan” does not include accident-only, credit, Medicaid plans, long-term care or disability income insurance, coverage issued as a supplement to liability insurance, workers’ compensation or similar insurance or automobile medical payment insurance. (g) Waiver prohibited. — The provisions of this section cannot be waived by contract. Any contractual arrangement in conflict with the provisions of this section or that purports to waive any requirements of this section is null and void. (h) A finding of overpayment must be based on the actual overpayment and not a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs. (i) The entity conducting the audit may not use extrapolation in calculating the recoupment or penalties for audits unless required by state or federal law or regulations.

Del. Code tit. 18, § 2740 Statement of policy.

It is the purpose of this subchapter to encourage the Commissioner to promulgate regulations by October 15, 1976, which assure that automobile insurance policies issued in Delaware, after the effective date of said regulations, will be understandable and readable by a person of average intelligence and education; or, in the event of the failure of the Commissioner to promulgate such regulations by October 15, 1976, to establish certain basic minimum readability requirements for automobile insurance policy forms. Accordingly, it is intended that subchapter III of this chapter shall become effective only upon the failure of the Commissioner to promulgate such regulations by October 15, 1976.

Del. Code tit. 18, § 2741 Commissioner’s authority to promulgate readability rules and regulations.

(a) In addition to those general powers granted in § 314 of this title, the Commissioner is hereby authorized and empowered to make rules and regulations to the extent the Commissioner deems necessary to assure that automobile insurance policy forms as described in § 2742 of this title [expired] are readable and understandable by a person of average intelligence and education; provided, however, that such rules and regulations shall require, in the manner the Commissioner deems appropriate, that all such automobile insurance policy forms shall have a total “readability score” of 40 or more on the Flesch Scale, although forms with a Flesch Test Score of less than 40 may be approved where the length of sentences and words are sufficiently compensated for by compliance with other standards set forth in such rules and regulations. (b) The Commissioner shall adopt and promulgate readability rules and regulations only after a hearing thereon of which notice has been given to all persons subject to the Commissioner’s supervision under this title who are to be affected by the proposed rule or regulation. Any readability rules and regulations so adopted and promulgated shall be effective upon the date specified therein.
Source: DE Code (Official Site)URL: https://delcode.delaware.gov/title18/c027/sc01/index.htmlFetched: 10/4/2026

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