Chapter 631

631.11(4)(a) (a) Knowledge when policy issued. No misrepresentation made by or on behalf of a policyholder and no breach of an affirmative warranty or failure of a condition constitutes grounds for rescission of, or affects an insurer’s obligations under, an insurance policy if at the time the policy is issued the insurer has either constructive knowledge of the facts under s. 631.09 (1) or actual knowledge. If the application is in the handwriting of the applicant, the insurer does not have constructive knowledge under s. 631.09 (1) merely because of the agent’s knowledge.

631.11(4)(b) (b) Knowledge acquired after policy issued. If after issuance of an insurance policy an insurer acquires knowledge of sufficient facts to constitute grounds for rescission of the policy under this section or a general defense to all claims under the policy, the insurer may not rescind the policy and the defense is not available unless the insurer notifies the insured within 60 days after acquiring such knowledge of its intention to either rescind the policy or defend against a claim if one should arise, or within 120 days if the insurer determines that it is necessary to secure additional medical information.

631.11(4m) (4m) Life and disability contracts.

631.11(4m)(a) (a) Copy of application to be made available. The policyholder under a life or disability insurance policy and any person whose life or health is insured under the policy may request in writing a copy of the application if he or she did not receive the policy or a copy of it, or if the policy has been reinstated or renewed without attachment of a copy of the original application. If the insurer does not deliver or mail a copy as requested within 15 working days after receipt of the request by the insurer or its agent or, in the case of a group policy certificate holder, does not inform such person within the same period how he or she may inspect the policy and application during normal business hours at a place reasonably convenient to the certificate holder, nothing in the application affects the insurer’s obligations under the policy to the person making the request. A person whose life or health is insured under a group life or disability insurance policy has the same right to request a copy of any document specified in par. (b), including the certificate.

631.11(4m)(b) (b) Statement or warranty. No statement, representation or warranty made by or on behalf of a particular certificate holder under a group life or disability insurance policy affects the insurer’s obligations under the certificate unless it is stated in the certificate, or in a written document signed by the certificate holder, a copy of which is supplied to the certificate holder or the beneficiary whose rights would be affected.

631.11(5) (5) Fraternals. This section applies to fraternals, as defined in s. 614.01 (1) (a).

631.11(6) (6) Incontestability provisions. This section is subject to ss. 632.46 and 632.76.

631.11 History History: 1975 c. 375, 421; 1977 c. 339 s. 44; Stats. 1977 s. 641.11; 1983 a. 189 s. 329 (25); 1995 a. 259.

631.11 Annotation If a question on a form calls for the applicant’s judgment or opinion as a lay person, any ambiguity should be construed against the insurer. Nolden v. Mutual Benefit Life Insurance Co., 80 Wis. 2d 353, 259 N.W.2d 75 (1977).

631.11 Annotation An insured’s contradictory statements constituted a breach of the contractual duties of notice and cooperation. Dietz v. Hardware Dealers Mutual Fire Insurance Co., 88 Wis. 2d 496, 276 N.W.2d 808 (1979).

631.11 Annotation Third parties may recover against an insurer even though the insured’s fraudulent application voided the policy under this section. Rauch v. American Family Insurance Co., 115 Wis. 2d 257, 340 N.W.2d 478 (1983).

631.11 Annotation Sub. (2) [now sub. (1) (b)] applies a reliance test to misrepresentations made in the negotiation or application for insurance, and not to statements made in proof of loss forms. Tempelis v. Aetna Casualty & Surety Co., 164 Wis. 2d 17, 473 N.W.2d 549 (Ct. App. 1991).

631.11 Annotation In order to make a written application form a part of an insurance policy by endorsement, the insurer must specifically write across the application itself that it is an endorsement and part of the policy. Smith v. Dodgeville Mutual Insurance Co., 212 Wis. 2d 226, 568 N.W.2d 31 (Ct. App. 1997), 96-3352.

631.11 Annotation Sub. (3) only applies to conditions subsequent to a policy becoming effective, not conditions precedent. Conditions to the making of the contract, conditions precedent, cannot be implicated by the statute because the policy has not yet come into existence. Fox v. Catholic Knights Insurance Society, 2003 WI 87, 263 Wis. 2d 207, 665 N.W.2d 181, 01-1469.

631.11 Annotation This section does not supersede the known-loss doctrine. That doctrine may apply whether or not the requirements of subs. (1) (b) and (4) (b) are met. American Family Mutual Insurance Co. v. Bateman, 2006 WI App 251, 297 Wis. 2d 828, 726 N.W.2d 678, 05-2219.

631.11 Annotation Sub. (1) (b) establishes the elements necessary to entitle an insurance company to rescind an insurance contract. There must be an affirmative warranty or misrepresentation, which is a question of law. Whether the statement was false, and whether the person making the statement knew, or should have known, that the statement was false are questions of fact. The burden of proof on an insurer seeking to rescind an insurance contract is clear and convincing evidence as to each element of the statute. Pum v. Wisconsin Physicians Service Insurance Corp., 2007 WI App 10, 298 Wis. 2d 497, 727 N.W.2d 346, 05-3049.

631.11 Annotation The term “promissory warranty” under sub. (3) is generally understood to mean a warranty that facts will continue to be as stated throughout the policy period, such that a failure of the warranty provides the insurer with a defense to a claim under the policy or a “continuing warranty.” Promissory warranties in insurance policies generally pertain to commitments by insureds designed to minimize the risk of loss. Obviously, minimizing a risk of loss can only occur prior to the loss. It is nonsensical to suggest that provisions dealing with post-loss adjustment fall into such a category. Kemper Independence Insurance Co. v. Islami, 2020 WI App 38, 392 Wis. 2d 866, 946 N.W.2d 231, 19-0488.

631.11 Annotation Affirmed. 2021 WI 53, 397 Wis. 2d 394, 959 N.W.2d 912, 19-0488.

631.11 Annotation In this case, the business-use clause in the homeowner’s policy was written as an exclusion, not a warranty or a condition, so sub. (3) did not apply to the business-use clause. The terms “warranty” and “condition” do not necessarily encompass any use restriction on a property. Kutchera v. State Farm Fire & Casualty Co., 560 F. Supp. 3d 1242 (2021).

631.13 631.13 Incorporation by reference. No insurance contract may contain any agreement or incorporate any provision not fully set forth in the policy or in an application or other document attached to and made a part of the policy at the time of its delivery except that:

631.13(1) (1) Rates. Any policy may by reference incorporate rate schedules and classifications of risks and short-rate tables filed with the commissioner; and

631.13(2) (2) Complex contracts. By rule or order or by approval of a form the commissioner may authorize for complex contracts incorporation by reference of provisions for administrative arrangements, premium schedules and payment procedures.

631.13 History History: 1975 c. 375.

631.15 631.15 Contract rights under noncomplying policies.

631.15(1) (1) Enforcement of policy terms. Except as otherwise specifically provided by statute, a policy is enforceable against the insurer according to its terms, even if it exceeds the authority of the insurer.

631.15(3m) (3m) Enforcement of statute and rule requirements. A policy that violates a statute or rule is enforceable against the insurer as if it conformed to the statute or rule.

631.15(4) (4) Reformation of contract. Upon written request of the policyholder or an insured whose rights under the policy are continuing and not transitory, an insurer shall reform and reissue its written policy to comply with the requirements of the law existing at the date of issue or last renewal of the policy.

631.15 History History: 1975 c. 375; 1987 a. 247.

631.15 Annotation When uninsured motorist coverage in the amount of $25,000 was contracted for, in violation of the requirement for $50,000 coverage under s. 632.32 (4m) (d), the higher level of coverage was read into the policy under sub. (3m), even though it was not reflected in the premium paid. Brunson v. Ward, 2001 WI 89, 245 Wis. 2d 163, 629 N.W.2d 140, 98-3002.

631.17 631.17 Written reason for coverage denial.

631.17(1) (1) In this section, “disability insurance policy” has the meaning given in s. 632.895 (1) (a).

631.17(2) (2) An insurer that denies coverage under an individual or group life or disability insurance policy or a certificate of group life or disability insurance shall advise the applicant or proposed insured in writing of the reasons for the denial.

631.17 History History: 1999 a. 95.

subch. II of ch. 631 SUBCHAPTER II

APPROVAL OF FORMS

631.20 631.20 Filing and approval of forms.

631.20(1) (1) Filing.

631.20(1)(a) (a) No form subject to s. 631.01 (1), except as exempted under par. (c), sub. (1g), or s. 631.01 (2), (3), (4), or (5) or by rule under par. (b), may be used unless it has been filed with and approved by the commissioner and unless the insurer certifies that the form complies with chs. 600 to 655 and rules promulgated under chs. 600 to 655. It is deemed approved if it is not disapproved within 30 days after filing, or within a 30-day extension of that period ordered by the commissioner prior to the expiration of the first 30 days.

631.20(1)(b) (b) Subject to s. 655.24 (1), the commissioner may by rule exempt certain classes of policy forms from prior filing and approval.

631.20(1)(c) (c) Subject to sub. (1m), a form first used and not already filed under par. (a) on or after August 1, 2008, is exempt from par. (a) except for any of the following:

631.20(1)(c)1. 1. A form subject to s. 655.24 (1).

631.20(1)(c)2. 2. A form for a worker’s compensation policy.

631.20(1)(c)3. 3. A form for a Medicare replacement policy or a Medicare supplement policy.

631.20(1)(c)4. 4. A form for a long-term care insurance policy, including a form for a nursing home or home health care policy.

631.20(1)(c)6. 6. A form issued by an insurer ordered by the commissioner under s. 601.41 (4) to file forms under par. (a). The commissioner may require an insurer to file forms under par. (a) to secure compliance with the law, including if the commissioner determines that the insurer violated sub. (1m).

631.20(1)(c)7. 7. A form that includes an appraisal or arbitration provision not specifically authorized by rule. The entire form, including the appraisal or arbitration provision, is subject to par. (a).

631.20(1)(c)8. 8. A form that contains a clause subject to s. 631.21, but only as to the clause.

631.20(1)(c)9. 9. A form for a policy of insurance to cover a warranty, as defined in s. 100.205 (1) (g).

631.20(1)(c)10. 10. A warranty contract form.

631.20(1)(c)11. 11. A form required to be filed under par. (a) by a rule promulgated by the commissioner.

631.20(1g) (1g) Exempt if approved by commission. A form for a product, as defined in s. 601.58 (2) (k), that is approved by or self-certified to, and not disapproved by, the Interstate Insurance Product Regulation Commission is exempt from subs. (1) (a) and (1m) (a), unless otherwise provided by a rule promulgated by the commissioner under s. 601.58.

631.20(1m) (1m) Use of certain forms.

631.20(1m)(a) (a) Except as exempted under sub. (1g) or s. 631.01 (2), (3), (4), or (5) or by a rule promulgated by the commissioner, an insurer may not, on or after August 1, 2008, use a form that is exempt from sub. (1) (a) under sub. (1) (c) unless the insurer does all of the following:

631.20(1m)(a)1. 1. Files the form with the commissioner 30 days before its use.

631.20(1m)(a)2. 2. Files the form in the manner and format, and with the attachments, prescribed by the commissioner.

631.20(1m)(a)3. 3. Certifies as required under par. (b) that the form complies with chs. 600 to 655 and rules promulgated under chs. 600 to 655. The commissioner may require an insurer to include specific compliance certifications.

631.20(1m)(b) (b) An insurer shall provide the certification under par. (a) 3. in the form prescribed by the commissioner. The certification shall be executed by a person who is an officer of the insurer and who is responsible for the form that is the subject of the filing. No insurer may file, and no insurer’s officer may execute, a false certification.

631.20(2) (2) Grounds for disapproval. The commissioner may disapprove a form under sub. (1) (a) or (3) upon a finding:

631.20(2)(a) (a) That it is inequitable, unfairly discriminatory, misleading, deceptive, obscure or encourages misrepresentation, including cases where the form:

631.20(2)(a)1. 1. Is misleading because its benefits are too restricted to achieve the purposes for which the policy is sold;

631.20(2)(a)2. 2. Contains provisions whose natural consequence is to obscure or lessen competition;

631.20(2)(a)3. 3. Is unnecessarily verbose or complex in language; or

631.20(2)(a)4. 4. Is misleading, deceptive or obscure because of such physical aspects as format, typography, style, color, material or organization;

631.20(2)(b) (b) That it provides benefits or contains other provisions that endanger the solidity of the insurer;

631.20(2)(c) (c) That in the case of the policy, though not of riders and endorsements, it fails to provide the exact name of the insurer and the full address of its home office; or

631.20(2)(d) (d) That it violates a statute or a rule promulgated by the commissioner, or is otherwise contrary to law.

631.20(2)(e) (e) That its use would violate s. 631.22.

631.20(3) (3) Subsequent disapproval. Whenever the commissioner finds, after a hearing, that a form approved or deemed to be approved under sub. (1) (a), a form filed under sub. (1m), or a form subject to subsequent disapproval under s. 601.58 (14) should be disapproved under sub. (2), the commissioner may order that on or before a date not less than 30 nor more than 90 days after the order the use of the form shall be discontinued or appropriate changes shall be made.

631.20(4) (4) Contents of order of disapproval. The commissioner’s disapproval must be in writing and constitutes an order. It must state the reasons for disapproval sufficiently explicitly that the insurer is provided reasonable guidance in reformulating its proposals.

631.20(5) (5) Explicit approval of certain clauses. General approval of a form under this section, or failure to disapprove, does not constitute approval of clauses specified in s. 631.21.

631.20(6) (6) Form that violates statute or rule.

631.20(6)(a) (a) The penalties under s. 601.64 (3) to (5) may not be imposed against an insurer for any of the following:

631.20(6)(a)1. 1. Using a form that does not comply with a statute or rule, including a rule or uniform standard adopted by the Interstate Insurance Product Regulation Commission, if the statute or rule was in effect on the date the form was approved or deemed to be approved under sub. (1) (a) or s. 601.58.

631.20(6)(a)2. 2. The use of a form solely based on a finding of the commissioner that the content of the form is misleading under s. 628.34 (1).

631.20(6)(b) (b) An insurer’s use of a form that does not comply with a statute or rule, including a rule or uniform standard adopted by the Interstate Insurance Product Regulation Commission, that takes effect after the date the form was approved or deemed to be approved under sub. (1) (a) or s. 601.58 is a violation of the statute or rule, and the penalties under s. 601.64 may be imposed against the insurer using the form.

631.20(6)(c) (c) Except as provided in par. (a) 2., an insurer’s use of a form filed under sub. (1m) that violates chs. 600 to 655 or rules promulgated under chs. 600 to 655 is a violation of the statute or rule, regardless of whether the form has been subsequently disapproved under sub. (3). The insurer is subject to the penalties and remedial orders provided under chs. 600 to 655, including ss. 601.41 (4) and 601.64.

631.20(7) (7) Surplus lines insurance. Except as provided in sub. (1) (c) 9. and s. 618.41 (6m), this section does not apply to a surplus lines insurance form issued under s. 618.41 before, on, or after April 20, 2012.

631.20 History History: 1975 c. 375, 421; 1979 c. 218; 1987 a. 247; 1999 a. 9; 2005 a. 74; 2007 a. 168; 2011 a. 224; 2013 a. 20.

631.20 Cross-reference Cross-reference: See also ss. Ins 6.05, 6.07, and 6.76, Wis. adm. code.

631.21 631.21 Explicit approval required.

631.21(1) (1) Required approval. Despite filing or general approval of a form under s. 631.20, the following clauses may not be used even if contained in the form unless the commissioner gives explicit approval to them:

631.21(1)(a) (a) Expeditious notice. Clauses requiring more expeditious notice than 1st class mail, as provided in s. 631.81 (2).

631.21(1)(c) (c) Reinstatement fees. A schedule of reinstatement fees under s. 632.74, if made a part of the policy. Such a schedule need not be included in the contract but may be given approval as a separate document specifically made applicable to particular classes of policies.

631.21(2) (2) Effect of failure to obtain explicit approval. If an insurer fails to obtain explicit approval from the commissioner for the clauses under sub. (1), the clauses shall be null and void.

631.21 History History: 1975 c. 375; 1985 a. 280; 2007 a. 168.

631.21 Cross-reference Cross-reference: See also ss. Ins 6.05 and 6.07, Wis. adm. code.

631.22 631.22 Consumer insurance policy readability.

631.22(1) (1) In this section “consumer insurance policy” means a life, disability, property or casualty insurance policy, or a certificate or a substitute for a certificate for group life, disability, property or casualty insurance coverage, which is issued to a person for a personal, family or household purpose and a copy of which is customarily, in the insurance industry, delivered or is required by law, rule or agreement to be delivered to the person obtaining insurance coverage.

631.22(2) (2) An insurer may provide a consumer insurance policy which is delivered to a person obtaining insurance coverage and is not exempt under sub. (5) only if the consumer insurance policy is coherent, written in commonly understood language, legible, appropriately divided and captioned by its various sections and presented in a meaningful sequence. The commissioner shall promulgate rules establishing standards for the determination of compliance with this subsection.