73. An insured incurs a covered accident and health insurance loss on May 30 which is submitted to the insurer on June 8. If the insured terminated coverage on June 1, the insurer
Answer: C
The insurer must pay the claim upon receipt of the proof of loss.
The insurer is obligated to pay the claim since the loss occurred while the coverage was still in effect, regardless of the termination date. The claim was submitted after the coverage was terminated, but the event leading to the claim happened before the termination.
A) can refuse to pay the claim because coverage has been terminated
This option is incorrect because the loss occurred on May 30, while the coverage was still active. The termination of coverage on June 1 does not negate the insurer's responsibility to cover losses incurred prior to that date.
B) can refuse to pay the claim under the post-existing conditions exclusion
This option is also incorrect. The situation does not invoke the post-existing conditions exclusion since the loss was not related to a pre-existing condition and occurred prior to the termination of the policy. Therefore, the insurer cannot refuse payment on these grounds.
C) must pay the claim upon receipt of the proof of loss
This option is correct because the claim is based on an incident that occurred while the insurance coverage was in effect. The insurer is required to settle claims for losses that happened during the period of coverage, provided the claim is submitted correctly.
D) must pay the claim within one year of termination of coverage
This option is incorrect as it misinterprets the obligations regarding the timing of claims. The insurer's obligation to pay does not extend to one year after termination if the loss occurred before the coverage ended. The insurer is only responsible for claims related to incidents that happened while the policy was active.
Conclusion
The correct answer is C because the insurer is legally required to pay claims for losses incurred before the termination of coverage, as seen in this scenario. All other options fail to recognize the timeline of the loss and the insurer's obligations under the policy, thus affirming the necessity for the insurer to honor the claim as long as it is substantiated by proof of loss.