Maine Life Insurance Claim Laws: Overdue Interest, Fees and 2436-A

Not legal advice. We summarized the Maine Revised Statutes from the Maine Legislature's site and two decisions of the Maine Supreme Judicial Court. Statutes change, and how they apply depends on the facts.

Maine’s approach

Maine relies on statutory penalties rather than tort. An undisputed claim paid late carries interest of 1.5% per month and shifts the claimant’s attorney fees to the insurer (24-A M.R.S. 2436). A second statute, 2436-A, gives a damages action for five specific claim practices. And Maine’s highest court has declined to create a bad-faith tort, reasoning that these statutory remedies already give insurers enough incentive.

When a claim becomes overdue

Section 2436 works in steps:

When payable. A claim is payable within 30 days after the insurer receives proof of loss and the loss is ascertained by written agreement with the insured or beneficiary (or by an arbitration award). For individual life insurance, the period is two months, matching section 2513 (2436(1)(B)).
Overdue. A claim neither disputed nor paid in that time is overdue. If the insurer asks in writing for reasonable additional information during the period, an undisputed claim is not overdue until the period runs again from receipt of that information (2436(1)).
Disputing properly. To dispute, the insurer must give a written statement of the grounds, based on a reasonable investigation and detailed enough for the beneficiary to understand and respond (2436(2)).
Interest. An overdue undisputed claim, or undisputed part, bears interest at 1.5% per month after the due date (2436(3)).
Fees. The insurer must pay a reasonable attorney fee for advising and representing the claimant if overdue benefits are recovered in a lawsuit or are paid after the insurer receives notice of the lawyer’s representation (2436(4)).

The statute defines “insured or beneficiary” to include an assignee, and nothing in it limits other claims (2436(1), (5)).

An older decision to know about. In Burne v. John Hancock Mutual Life Insurance Co., 403 A.2d 775 (Me. 1979), the court held that the version of section 2436 then in force, which covered only claims “made by a named or other person insured,” did not reach a claim by the assignee of a mortgage life policy’s beneficiary. It called the statute penal and construed it strictly. The current text quoted above expressly refers to the “insured or beneficiary” and to individual life insurance, so Burne’s result rests on wording that has since changed. Because the statute is still treated as penal (see Marquis, below), insurers may argue for strict readings; a Maine lawyer can assess them.

The life settlement clause

Every Maine life policy must promise settlement on receipt of due proof of death (and, at the insurer’s option, the policy and proof of the claimant’s interest); any stated settlement period may not exceed two months from receipt of the proofs (24-A M.R.S. 2513).

Suing over claim practices: 2436-A

A person injured by their own insurer may sue and recover damages, costs, reasonable attorney fees and 1.5% monthly interest on the damages for any of these (2436-A(1)):

knowingly misrepresenting pertinent facts or policy terms about the coverage;
not acknowledging and reviewing a claim within a reasonable time after written notice;
threatening to appeal an arbitration award just to force a lower settlement;
not affirming or denying coverage, while reserving defenses, within a reasonable time after finishing its investigation;
without just cause, not making a prompt, fair and equitable settlement when liability has become reasonably clear.

An insurer acts without just cause when it refuses to settle without a reasonable basis to contest liability or the amount (2436-A(2)). Other claims remain available (2436-A(3)). The statute does not define “own insurer,” and we have not reviewed Maine decisions on whether a beneficiary, as opposed to the policy owner, qualifies; ask a Maine lawyer.

No independent bad-faith tort

In Marquis v. Farm Family Mutual Insurance Co., 628 A.2d 644 (Me. 1993), a fire insurance case, the jury found the insurer had investigated in bad faith. The court agreed the insurer owed a duty of good faith and fair dealing implied in the contract, but expressly refused to recognize an independent tort for breaching it. Remedies are traditional contract damages plus the statutory remedies in the insurance code. The court also upheld striking emotional-distress damages from the contract claim, noting the general rule that such damages require physical injury or a contract whose breach is likely to cause serious emotional disturbance, and it held that a bad-faith finding did not by itself entitle the insureds to section 2436 interest and fees where the insurer had complied with that statute’s timing rules. Marquis was a property claim; ask a Maine lawyer how it applies to a death claim.

Contest period

A Maine life policy must become incontestable after it has been in force during the insured’s lifetime for no more than two years from issue, except for nonpayment and, if the insurer chooses, disability and accidental-death benefits (2507). The incontestability clause bars challenges to the policy’s validity, but exclusions written into the policy can still be enforced (2516). Under 2506, the policy plus an attached application forms the entire contract.

Suicide and other exclusions

Individual life policies may not exclude death by a specified cause except for the listed exceptions in 2525(1)(B), which include war, aviation, hazardous occupations or avocations, foreign residence, suicide within two years of issue and suicide within two years after an increase in face amount, as to the increase. Exclusions other than the increase rule carry a reserve payment (2525(2)). Policies also may not limit the time to sue to less than three years after the claim accrues (2525(1)(A)).

For group life, section 2630 bars any suicide exclusion broader than suicide within two years after coverage begins or after an increase in coverage.

Misrepresentation in the application

Maine’s rule in 2411 has two grounds, not three. An application misstatement defeats recovery only if it was fraudulent, or it was material to the risk or hazard such that the insurer in good faith would not have issued the policy, or not at that premium or amount, or not covering the hazard that caused the loss. For life and several other lines, the insurer need prove only one of those two grounds (2411, final paragraph). Materiality in Maine is tied to what the insurer would actually have done.

Grace, lapse notices and reinstatement

Grace. Thirty days, or a month of at least 30 days, for premiums after the first; the insurer may charge up to 6% annual interest for the grace days and deduct overdue premium from a death claim (2505).
Lapse notice. An individual life policy in force at least a year may not terminate for nonpayment unless the insurer mailed a cancellation notice at least 21 days before the grace period ends to the policyholder and to any third party the policyholder designated in writing (2556(1)).
Cognitive impairment. Within 90 days after a lapse for nonpayment, the policyholder, someone acting for them or a covered dependent may request reinstatement on the ground that the lapse resulted from the policyholder’s cognitive impairment or functional incapacity; the insurer may ask for a medical demonstration, and a reinstated policy covers losses from the lapse date, subject to paying back premium (2556(2)). If an insured died shortly after a lapse during a period of dementia, this provision can matter a great deal.

Group life conversion

Coverage ending with employment or eligibility, including a covered dependent’s coverage, may be converted to an individual policy without evidence of insurability if application and the first premium are made within 31 days; the group policy may exclude the term-insurance option (2621).
A death during that window makes the convertible amount payable under the group policy (2623).
If notice of the right comes later than 15 days before the deadline, the period runs 15 days from notice, but never more than 60 days past the original deadline (2625).

ERISA often governs employer plans; see employer group life.

Time to sue

Maine’s general limit for civil actions is six years after the claim accrues (14 M.R.S. 752), and a life policy cannot shorten that below three years (2525(1)(A)).

Homicide by a beneficiary

Under 18-C M.R.S. 2-802:

An individual who feloniously and intentionally kills the insured forfeits estate benefits, and the killing revokes any revocable beneficiary designation in the killer’s favor; the instrument is read as if the killer disclaimed (2-802(2), (3), (5)).
A final conviction, after appeals, is conclusive; otherwise an interested person may petition, and the court decides on a preponderance of the evidence (2-802(7)).
An insurer that pays in good faith on satisfactory proof of death is protected until it receives written notice of a claimed forfeiture, sent by registered or certified mail, return receipt requested, to its main office, or served like a summons. After notice it may deposit the proceeds with the probate court (2-802(8)).

Maine also has a separate section, 18-C M.R.S. 2-803, that limits benefits, including life insurance, to a person convicted of a crime against the decedent, up to the restitution owed.

Divorce and beneficiary designations

Maine’s current Probate Code, enacted by P.L. 2017, c. 402, includes the uniform divorce rule at 18-C M.R.S. § 2-804. Except where the governing instrument’s express terms, a court order or a property-division contract says otherwise, a divorce or annulment revokes a revocable disposition to the former spouse, and any disposition to the former spouse’s relatives, in an instrument signed before the marriage ended.

An insurer or other payor that pays in good-faith reliance on the instrument before it receives written notice of the divorce, annulment or remarriage is not liable for that payment, but it is liable for payments made after such notice. Federal law governs many employer plans instead (Egelhoff).

A worked example

An insured in Portland dies in January 2026. The beneficiary submits a claim with the death certificate, and the insurer receives it on February 2. The insurer does not dispute the claim in writing or ask for more information. Under 2436 and 2513, the claim becomes overdue after two months, in early April. When the insurer finally pays in June, after the beneficiary hires a lawyer, it owes 1.5% per month from the due date and a reasonable attorney fee, because the overdue benefit was paid after notice of the lawyer’s involvement.

Contacting the Bureau of Insurance

Maine’s Bureau of Insurance takes complaints online or by mail, with a separate form for life and health matters: File a Complaint/Dispute (Maine Bureau of Insurance). Filing does not stop the limitation period.

Sources

Maine Revised Statutes, Titles 14, 18-C and 24-A, Maine Legislature, Office of the Revisor of Statutes: legislature.maine.gov.
Maine Bureau of Insurance, File a Complaint/Dispute: maine.gov. (search listing).
Burne v. John Hancock Mutual Life Insurance Co., 403 A.2d 775 (Me. 1979) (full opinion, CourtListener): courtlistener.com. Read November 3, 2026.
Marquis v. Farm Family Mutual Insurance Co., 628 A.2d 644 (Me. 1993) (full opinion, CourtListener): courtlistener.com. Read November 3, 2026.
Maine Revised Statutes, Title 18-C, § 2-804 (Maine Legislature): legislature.maine.gov.

Not legal advice. This page summarizes general rules and the specific statutes cited. Your policy's wording, the state whose law applies, and whether the coverage came through an employer can all change the result. See the disclaimer and editorial policy.