When you purchase an insurance policy, you expect security and peace of mind. However, there are instances where the insurance company may decide to rescind your policy.
Policy rescission is a formal revocation or cancellation of your insurance coverage. Understanding why this happens and what you can do about it is important for protecting yourself and your assets.
Material misrepresentation
Failing to disclose relevant information such as a pre-existing medical condition, a history of prior claims or property modifications can constitute material misrepresentation. Even innocent mistakes or omissions can give the insurance company grounds to rescind your policy.
Fraudulent activity
Engaging in fraudulent activities is a serious offense that can lead to policy rescission. These might include deliberately providing false information or staging events to make a claim.
Consequences of rescission
When an insurance provider rescinds a policy, it is as if the policy never existed. This means you lose coverage for any claims made under that policy, and it may be necessary for you to repay any benefits received. Additionally, having a policy rescinded can make it more difficult to obtain insurance in the future, as it signals to other insurers that you may present a higher risk.
Your options
If you believe that your insurance provider wrongfully rescinded your policy, you have options. You can appeal the decision with the insurance company or seek guidance from the California Department of Insurance. You might also choose to take legal action against the insurance company or seek compensatory damages for wrongfully rescinding your coverage.
While having your insurance policy rescinded can be unsettling, a wrongful rescission is contestable. By providing accurate information and avoiding fraudulent activities, you can help maintain the integrity of your insurance coverage and safeguard your financial well-being.
