Not legal advice. This page summarizes the Vermont Statutes Online, published by the Vermont General Assembly, and one Vermont Supreme Court decision. It does not cover Department of Financial Regulation rules or later cases.
Vermont at a glance
- A firm 30-day rule with interest from death. Added in 2020 (Act 103 of the 2019 adjourned session), 8 V.S.A. 3665b sets both a deadline and an interest floor.
- A penalty rate after the deadline. Late payment triggers interest at the judgment rate.
- Forms or waiver. An insurer that does not send claim forms within a reasonable time loses the right to insist on them.
- A recognized tort. Bushey v. Allstate (1995) allows first-party bad-faith claims under a two-part test.
Section 3665b: deadline and interest
Section 3665b covers life policies and annuity death benefits. It defines “beneficiary” as anyone making a claim against a life policy.
- Deadline. A life claim “shall be paid within 30 days after the date that a properly executed proof of loss is received by the insurer” (3665b(b)).
- Interest on every payment. All life claim payments must include interest from the date of death to the date of payment, at the rate the insurer pays on proceeds left on deposit or 6%, whichever is greater (3665b(b)).
- Contested claims. If a claim is contested, it must be paid within 30 days after a final nonappealable judgment against the insurer, a binding arbitration decision, or a settlement agreement among the insurer, the beneficiary and the Department, as applicable (3665b(d)).
- After the deadline. An insurer that misses the applicable period “shall thereafter pay interest on the amount of the claim at the judgment rate allowed by law,” accruing from 30 days after it received the proof of loss (3665b(e)). Which rate that is at a given time, and how it combines with the 6% floor, are questions to confirm with a Vermont lawyer.
The standard-provisions statute is consistent: a policy that names a settlement period may not allow more than 30 days from receipt of proof of death (3731(10)).
Claim forms
Two sections deal with forms:
- On request. An insurer must furnish proof-of-loss forms on the written request of anyone claiming a loss, without taking responsibility for how they are completed (3715).
- Waiver. An insurer must provide the forms its contract requires to the claimant or beneficiary, and if it fails to furnish them within a reasonable time after notice of the loss, that failure is deemed a waiver of any requirement that proof be filed on those forms as a condition of recovery (3664).
In practice, a beneficiary who gives written notice of the death and gets no forms can submit proof in another reasonable form, such as a certified death certificate with a cover letter, and should keep a copy.
Standard provisions
Section 3731 applies to individual life policies (not group or pure endowments). Among its requirements:
- Grace. 30 days (or a calendar month of at least 30 days), during which the policy stays in force; an unpaid premium may be deducted from a claim arising during grace (3731(2)).
- Entire contract. The policy plus an attached application is the whole contract, and application statements are, absent fraud, representations rather than warranties (3731(3)).
- Contest period. Apart from unpaid premiums and disability or accidental-death benefits, the policy becomes incontestable after two years in force during the insured’s lifetime from its issue date (3731(4)).
- Reinstatement. A reinstated policy may be contested for fraud or misstatements material to the reinstatement only for the same period, and with the same conditions, as after original issue (3734(a)).
An incontestability clause bars only a challenge to the policy’s validity; exclusions and restrictions written into the policy can still be raised (3733). The provisions reviewed for this page do not include a suicide-exclusion limit, so check the policy wording.
Misstatements in the application
Under 3736, misrepresentations, omissions, concealment and incorrect statements do not prevent recovery unless one of three conditions is met:
- the statement was fraudulent;
- it was material to the acceptance of the risk or the hazard assumed; or
- the insurer, in good faith, would not have issued the policy, or would have charged a higher premium, issued less or excluded the hazard that caused the death, had it known the truth.
Payment and competing claims
When proceeds are paid according to the policy, the payment fully discharges the insurer unless, before payment, it received written notice at its home office that someone else claims the money or an interest in the policy (3712). A person with a competing claim, including one based on the killing rule below, should send that notice promptly and keep proof of delivery.
Unfair claim settlement practices
Section 4724(9) lists thirteen unfair claim practices, (A) through (M), when committed “with such frequency as to indicate a business practice.” They include:
- refusing to pay without a reasonable investigation based on all available information (D);
- failing to accept or deny coverage within a reasonable time after proof-of-loss statements are complete (E);
- not trying in good faith to settle promptly, fairly and equitably when liability is reasonably clear (F);
- paying beneficiaries without a statement of the coverage paid (I);
- not promptly explaining the policy basis for a denial or compromise offer (M).
Bushey v. Allstate: the bad-faith tort
In Bushey v. Allstate Insurance Co., 164 Vt. 399, 670 A.2d 807 (1995), an injured auto policyholder sued his own insurer over its handling of his claim. The Vermont Supreme Court held that a first-party bad-faith action lies in Vermont. The plaintiff must show that:
- the insurer had no reasonable basis to deny policy benefits; and
- it knew or recklessly disregarded that no reasonable basis existed.
An insurer may challenge claims that are “fairly debatable,” and a good-faith error is not bad faith. In Bushey itself, the court affirmed summary judgment for the insurer because the claim was fairly debatable on the medical evidence. The case involved an insured under his own policy; how far the tort extends to a life insurance beneficiary is a question for a Vermont lawyer.
Group coverage
This page does not summarize Vermont’s group life conversion rules. Workplace coverage may also be governed by federal ERISA; see employer group life.
Six years to sue
Unless another statute applies, a civil action must be commenced within six years after the cause of action accrues (12 V.S.A. 511). Check the policy for a shorter suit clause and get advice early on when the claim accrued.
Unlawful killing
Under 14 V.S.A. 322, a person who intentionally and unlawfully kills the decedent forfeits any share they would inherit or receive “under the last will of a decedent, or otherwise,” and that share passes to the remaining heirs or beneficiaries. A record of conviction for intentionally and unlawfully killing the decedent is admissible and conclusively establishes the killing. The statute does not set out an insurer-specific procedure; that comes from the home-office notice rule in 8 V.S.A. 3712. How 322 applies to a named life insurance beneficiary should be confirmed with a Vermont lawyer.
A worked example
An insured dies in Burlington on January 5. The beneficiary asks for claim forms on January 10; none arrive by February 20, so she mails a certified death certificate and a written claim, which the insurer receives on February 24. Under 3664, the lack of forms should not block the claim. Payment is due by March 26. Whenever it is paid, it must carry interest from January 5 at the greater of the deposit rate or 6%. If it is paid after March 26, 3665b(e) adds judgment-rate interest running from March 26.
Complaints to the Department of Financial Regulation
The Vermont Department of Financial Regulation takes insurance complaints, including about life insurers: Insurance Complaints (Vermont DFR). A complaint does not stop the six-year clock.
Sources
- Vermont Statutes Online, Titles 8, 12 and 14, Vermont General Assembly: legislature.vermont.gov.
- Vermont Department of Financial Regulation, Insurance Complaints: dfr.vermont.gov.
- Bushey v. Allstate Insurance Co., 164 Vt. 399, 670 A.2d 807 (1995) (full opinion, CourtListener): courtlistener.com. Read November 3, 2026.
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.