State RegulationsPA specificDifficulty 2/5
An insured has missed premium payments on an accident and health policy and then incurs a covered loss. Under the unpaid-premium provision of 40 P.S. § 753(B)(7), what may the insurer do when settling the claim?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under the unpaid-premium provision of 40 P.S. § 753(B)(7), the insurer may deduct any past-due premium from the claim settlement. The claim itself remains payable — the insurer nets what it is owed against what it owes — rather than using the missed premiums as a lever to void the policy or refuse the loss.
Why the other options are wrong
- A) The provision provides a deduction from proceeds, not a precondition of a year's advance premiums before any claim is honored.
- B) Billing overdue premiums separately with penalties is not the statutory mechanism; the deduction comes out of the settlement itself.
- C) The policy is not canceled retroactively; the claim is paid subject to the premium deduction.
Memory hook
Pay the claim, skim the back premium — settle net, not never.