Reformed

What Does Reformed Mean?

Reformed is an insurance term for a policy that is rewritten to correct a factual error or resolve a conflict between the insurer and the insured. These rewrites are ordered by a court of law, often following a lawsuit.

Insuranceopedia Explains Reformed

The principle of utmost good faith is observed when the insurer (or the representative of the insurance company) and the insured commit themselves to an insurance contract. This means that they must disclose the information required for the insurer to give the right premium price and for the insured to get the coverage they want. When this principle is broken because either party has withheld or not fully disclosed vital information, then the contract might be rewritten by court order.

For instance, when the insured fails to tell the insurer of a health condition that could alter the premium, then the coverage might be contested in court. If intentional misinformation is proven, the court will alter the policy in favor of the insurer.