Pre-Existing Condition in Insurance: When Can It Be Rejected and When Not

What Is a “Pre-Existing Condition” in Insurance?

A pre-existing condition is a medical condition that existed prior to joining the insurance policy. Insurance companies sometimes attempt to reject claims on the grounds that the current illness stems from a condition that existed before joining. Not every such rejection is lawful, and most rejections are subject to judicial review.

The Insurance Contract Law, 5741-1981, governs this matter in Sections 6-7. The law establishes a limited duty of disclosure: the insured is obligated to disclose only details that the insurer specifically asked about in the application form. If the company did not ask, no duty of disclosure arises. This is a significant advantage.

When Is a Rejection for Pre-Existing Condition Lawful?

A rejection is lawful when three conditions are simultaneously met. First, the insured did not disclose the condition in the application form. Second, the current illness is directly connected to the pre-existing condition. Third, the policy contains an explicit exclusion for this condition. All three conditions must be present concurrently.

In practice, insurance companies often claim a connection that cannot be proven. For example, chronic back pain diagnosed before joining does not necessarily relate to a disc injury sustained in an accident. The court will examine the causal relationship in depth.

When Is a Rejection for Pre-Existing Condition Unlawful?

The rejection is unlawful when: the company was aware of the condition and did not include an exclusion, the questions in the application form were not clear, the current illness differs from the pre-existing condition, and the causal connection was not proven. Furthermore, if the insurance company was aware of the medical background from the outset and nonetheless collected premiums, it may be prevented from excluding the pre-existing condition.

Section 6(g) of the Insurance Contract Law provides that non-disclosure does not entitle the insurer to be released from liability if it was aware of the undisclosed details. Conversely, fraudulent non-disclosure may lead to cancellation of the policy retroactively.

Burden of Proof

It is the insurance company that must prove that the current illness stems from the pre-existing condition. The insured does not need to prove the absence of connection. This is a significant advantage for the insured in legal proceedings. Israeli case law has established repeatedly that the burden of proof rests on the insurance company, and that standard of proof is high.

In many cases that we have handled, the rejection did not withstand judicial scrutiny. Insurance companies rely on expert medical opinions submitted on their behalf, but the court may appoint its own expert to examine the matter objectively.

Common Errors Made by Insureds

The most common error is accepting a rejection letter without appeal. Even if you received a rejection in writing, that is merely the beginning of the process. Additional errors include failure to preserve correspondence with the insurance company, failure to consult an independent medical expert, and delay in filing the appeal. A response must be filed within 60 days of the rejection to preserve rights.

Another error is signing a partial settlement agreement at an early stage. Insurance companies sometimes offer a partial sum promptly to close the file before the insured understands the full extent of their entitlements.

What to Do When Facing a Pre-Existing Condition Rejection

Obtain the rejection reasons in writing. Consult a medical expert who will clarify whether there is a medical connection between the conditions. Consult a lawyer who will assess whether the rejection is lawful. In most cases handled by us, the rejection does not withstand judicial scrutiny.

After obtaining a medical opinion, submit a claim to the insurance company with the medical and legal basis. If the company continues to refuse, file a lawsuit in court. You may also approach the Capital Market, Insurance and Savings Authority at the Ministry of Finance.

Outcomes of Pre-Existing Condition Claims

In life and health insurance claims where a pre-existing condition claim is raised, the rate of success in legal proceedings is high. This is because insurance companies tend to reject claims even when they have no strong grounds. The settled law is clear: a direct causal connection must be proven, not merely a possible one.

Compensation amounts in insurance claims can reach hundreds of thousands of shekels, and in disability insurance, accumulated payments over years can reach millions.

Frequently Asked Questions

Can an insurance company reject a claim two years after premium collection?

This is a critical question. There are differing views in case law, but generally Section 7 of the Insurance Contract Law provides that if the insurance company did not cancel the policy within a reasonable period after learning of the non-disclosure, it loses the right to reject. Each case is examined on its merits.

What happens if I was unaware of the condition at the time of joining?

If you were unaware of the condition when you joined the insurance, no duty of disclosure arose at all. The Insurance Contract Law requires disclosure only of details that the insured actually knew. A condition diagnosed after joining cannot be a “pre-existing condition.”

Is a “possible” medical connection sufficient for rejection?

No. Case law requires a direct and proven causal connection, not merely a possible one. A medical opinion stating “there may be a connection” is insufficient for proof. “More likely than not” is required to demonstrate that the current illness directly stems from the pre-existing condition.

What if the exclusion in the policy is phrased ambiguously?

Under Section 25 of the Insurance Contract Law, ambiguity in a policy is construed in favor of the insured. If the exclusion for the pre-existing condition is not clear and specific, the court will interpret it in your favor. This is an important principle to utilize.

How long is available to file a claim after rejection?

Under the Insurance Contract Law, a lawsuit in court must be filed within three years from the date the insured learned of the rejection. Nevertheless, prompt action is recommended. Evidence and memories fade over time, and early consultation with a lawyer increases the prospects.

Is compensation available for mental anguish beyond the insurance coverage?

Yes. In insurance claims that were rejected improperly, the court may award compensation for mental anguish and punitive damages in certain circumstances. Such amounts have in fact been awarded in cases where the insurance company acted in bad faith.

For advice on an insurance claim rejected due to a pre-existing condition, contact the insurance claims attorney at the Lev-Taieb firm: 072-2428822.