What Happens If Your Insurance Is Rescinded?
Most people purchase insurance with the expectation that it will provide protection when life takes an unexpected turn. They answer application questions, pay premiums, and assume the policy will remain in place as long as they meet their obligations. That expectation often changes only after they file a claim and receive a notice stating that the insurance company has rescinded the policy instead of paying benefits.
A rescinded insurance policy presents a very different situation from a standard claim denial. Rather than disputing whether a specific loss is covered, the insurer asserts that the policy should never have existed because of an alleged material misrepresentation or omission during the application process. Whether that position is legally justified depends on the facts, the policy language, and the law governing the claim.
At Kantor & Kantor, we have spent decades helping people understand these complex insurance disputes. Our philosophy remains simple: we are people helping people.
Received an insurance rescission notice? Contact Kantor & Kantor, LLP online or call us at 818-886-2525 for a free case evaluation.
Key Takeaways: Rescinded Insurance Policies
- Insurance rescission is not the same as a claim denial — the insurer asserts the policy should never have existed, eliminating all coverage from the start.
- Rescission requires the insurer to show a material misrepresentation or omission, not merely a technical inaccuracy on the application.
- Whether ERISA or state law governs your claim affects your deadlines, appeal rights, and litigation options.
- You should never cash a premium refund check accompanying a rescission notice without first consulting an attorney.
- Many rescission decisions can be challenged, particularly when the alleged misrepresentation would not have changed the underwriting outcome.
What Is an Insurance Policy Rescission?
Insurance policy rescission occurs when an insurer treats a policy as void from its inception. Instead of evaluating a claim under an active contract, the insurer argues the policy should never have been issued due to alleged issues in the application or underwriting process. Rescission effectively unwinds the contract — it can result in denial of all claims under the policy and, in some cases, repayment of premiums already received. A claim denial, by contrast, applies to an existing and valid policy. Rescission goes further by challenging the existence of the contract itself.
Insurers mostly pursue rescission when they believe undisclosed or misstated information would have changed the underwriting decision. From their perspective, it is a broader remedy than denial because it eliminates all potential liability under the policy rather than resolving a single claim.
Why Do Insurance Companies Rescind Policies?
Insurance companies typically pursue rescission when they believe the policy was issued based on inaccurate or incomplete application information that would have affected underwriting decisions. In ERISA and individual insurance disputes, insurers rely heavily on application records, medical history, and underwriting files to justify this outcome.
Alleged Misrepresentations on the Insurance Application
Insurers often allege misrepresentation when they believe an applicant provided incorrect or incomplete answers on the insurance application. This may involve medical history, treatment records, lifestyle factors, or other underwriting information that influences risk assessment. The insurer must connect the alleged misstatement to information it considers relevant to issuing the policy, even if the applicant did not intend to mislead.
Alleged Omissions During Underwriting
Rescission may also be based on omissions, where the insurer claims the applicant failed to disclose information requested during underwriting. These disputes often focus on whether the question was clear and whether the omitted information was actually responsive to the application. Underwriting disputes often turn on how questions were phrased and whether the applicant reasonably understood what needed to be disclosed at the time of application.
Material vs. Immaterial Application Errors
Not every inaccuracy leads to rescission. Insurers generally must show that the misrepresentation was material — meaning it would have influenced the decision to issue the policy or the terms of coverage. Material errors affect underwriting outcomes such as approval, premiums, or exclusions, while immaterial errors are technical inaccuracies that would not have changed the insurer’s decision. Rescission disputes often focus on whether the insurer can prove materiality rather than simply identifying an error in the application.
What Should You Do If Your Insurance Policy Is Rescinded?
A rescission notice changes the entire framework of an insurance dispute. Instead of a disagreement about a single claim, the insurer is challenging the existence of the policy itself. Responding effectively requires focusing on documentation, policy structure, and the insurer’s stated reasoning.
Step 1: Read the Rescission Notice Carefully
Review the rescission notice line by line to identify the exact basis the insurer used to void the policy. This usually includes alleged misrepresentations or omissions in the application process. The language in this notice sets the scope of the dispute and determines what evidence will matter if the decision is challenged.
Step 2: Request the Insurer’s Underwriting and Claim File
Request the complete underwriting and claim file from the insurer. This file typically includes application materials, underwriting notes, medical records, and internal evaluations that led to the rescission decision. This step reveals how the insurer interpreted the application answers and what information it relied on when deciding to void the policy.
Step 3: Gather Documents That Support Your Application Answers
Collect any records that confirm the accuracy or context of your original application responses. This may include medical records, prior insurance applications, or communications that clarify how questions were answered. These documents help establish whether the insurer’s interpretation of the application aligns with the actual facts at the time of submission. If you receive a rescission notice accompanied by a premium refund check, do not cash it without first consulting an attorney.
Step 4: Determine Whether ERISA or State Law Governs Your Claim
Identify whether the policy falls under ERISA or state insurance law. Employer‑sponsored benefits often fall under ERISA, while individually purchased policies are usually governed by state law. This distinction affects deadlines, procedures, and what evidence a court may consider if the dispute proceeds to litigation.
Step 5: Evaluate Your Appeal or Litigation Options
Review the policy terms and rescission notice to determine whether an internal appeal is available or whether litigation may be necessary. Some ERISA plans require exhaustion of administrative remedies before court action. The next step depends on the governing law and the strength of the administrative record created during the insurer’s decision process.
Why Work With Kantor & Kantor
Insurance rescission cases require a close reading of policy language, underwriting records, and insurer decision‑making. These disputes often turn on details that only become clear after a structured review of the file and a clear understanding of how insurers build their positions.
Kantor & Kantor focuses exclusively on insurance claim denials and coverage disputes, including rescission matters involving life insurance, disability benefits, long‑term care, and other insurance products.
- Former insurer perspective: Our attorneys include professionals who have worked for insurance companies and understand how claims are evaluated and how rescission decisions are built internally. This background helps identify how insurers interpret application answers and where those interpretations may overreach the policy language.
- Record of handling insurance disputes: We have handled a wide range of insurance coverage disputes involving rescission, claim denials, and policy interpretation issues across ERISA and individual insurance matters, at both the administrative and litigation stages.
- Integrity in representation: The firm approaches each case with a focus on thorough preparation and careful review of the facts rather than assumptions about outcomes.
- Free consultations: Kantor & Kantor offers free consultations to help individuals understand how rescission decisions are made and what options may exist under the policy and applicable law.
“I have been disabled since 2015. My disability insurance company denied my claim. Kantor & Kantor represented me and with little work required by me, helped me get a great settlement. Thank you Kantor & Kantor.” — Gary P.
“This is the firm you should contact first… the firm has one goal and that is to protect defend and win your case with you on their mind — super friendly and available 24/7!” — Malek F.
“This attorney group took on my wife’s six-year-old insurance claim and got her a good settlement. They were extremely helpful and communicative.” — Robin R.
“Kantor and Kantor did an excellent job in representing me in my ERISA disability appeal. They were knowledgeable, professional, honest, and thorough in my representation. The result was that my benefits were reinstated.” — E. Stewart
How Rescinded Insurance Policy Lawyers May Help
A rescission decision often rests on how an insurer interprets application answers and underwriting records, not just on the underlying facts of the claim. Reviewing the insurer’s reasoning and the documents it relied on can clarify whether the decision aligns with the policy language and applicable law.
- Reviewing the insurer’s justification: Our rescinded insurance policy lawyers will review the rescission notice alongside the full policy file to identify the exact basis the insurer used to void coverage. This includes examining how the insurer characterized application responses and whether the stated reason matches the underlying records.
- Identifying underwriting inconsistencies: Our team will compare application answers with underwriting notes, medical records, and internal insurer communications to identify inconsistencies in how information was evaluated. These discrepancies can become important in determining whether the insurer applied its own standards consistently.
- Building the administrative record in ERISA cases: In ERISA‑governed disputes, the administrative record controls what a court can review. Our firm can help ensure that all relevant evidence is submitted during the internal review process so it becomes part of that record.
- Challenging whether the alleged misrepresentation was material: Rescission often depends on whether the insurer can prove that an alleged misrepresentation was material to the underwriting decision. We evaluate whether the insurer can demonstrate that the policy would not have been issued, or would have been issued on different terms, if the information had been accurately disclosed.
Rescinded Insurance Policy FAQs
Can an insurer rescind only part of my coverage?
Sometimes. An insurer may try to limit or modify coverage instead of voiding the whole policy, depending on the contract and the alleged misstatement. Traditionally, rescission applies to the entire policy because it challenges the contract’s validity from the start. Some courts allow narrower remedies when the issue affects only part of the coverage.
Can an insurance company rescind a policy after paying claims under it for years?
Possibly. An insurer may still attempt rescission if it later alleges material information was missing or wrong when the policy was issued. Time alone does not bar it. Much depends on whether the insurer could have discovered the issue earlier and whether its delay weakens its legal position.
Can a beneficiary challenge a rescission if the policyholder has already passed away?
Yes. A beneficiary with standing under the policy or applicable law can challenge a rescission after the policyholder’s death. The dispute then turns on whether the insurer can prove the policy should be voided, which usually rests on the underwriting file and what the policyholder disclosed at the time of application.
Work With Our Rescinded Insurance Policy Lawyers
Rescission disputes require a careful review of application records, underwriting files, and the insurer’s stated justification for voiding coverage. These cases often turn on whether the insurer can properly support its interpretation of the application and whether the decision aligns with the governing policy language and applicable law.
At Kantor & Kantor, we represent individuals facing rescinded insurance policies across a wide range of insurance products, including life, disability, long‑term care, and ERISA‑governed plans. Contact us today to schedule a free case evaluation.
Don’t face a rescission notice alone. Contact Kantor & Kantor, LLP online or call us at 818-886-2525 to discuss how we may be able to help you challenge the decision and protect the benefits you are entitled to under your policy.
Attorney Glenn R. Kantor
Glenn Kantor is a founding partner of Kantor & Kantor LLP. As a young attorney, Glenn saw the injustice of wrongful insurance denials and created a law firm to represent individuals seeking to obtain their rightful benefits. Glenn is committed to ensure that clients receive the benefits they are entitled to under their insurance policies or group health plans. [Attorney Bio]
