Our Lawyers Fight Unfair Insurance Rescissions
Rescinded Insurance Policy Lawyers
If your insurance company sent you a rescission notice, you may wonder what to do next. First, you should understand what a rescission is and why it may happen. Next, if you think your insurance company unfairly or unjustly rescinded your policy, you should speak with one of our insurance lawyers at Kantor & Kantor to learn about your legal options.
To issue an insurance policy, a company typically requires a potential new customer to fill out a questionnaire. The company bases its decision to insure an individual, or property, on the information provided. If an insurance company rescinds your policy, it is likely the company decided there was misrepresentation on your part when you provided information on your application for coverage. Sometimes, the rescission of a policy is legally justified, but there are instances where an insurance company unfairly rescinds a policy to avoid paying claims. This may be an act of bad faith on the part of the insurer which may provide grounds for a legal case. Our attorneys at Kantor & Kantor can determine if that’s true about your policy rescission.
Don’t delay if you receive a rescission notice. Get help from our team of deeply experienced insurance lawyers. Call us today at 818-886-2525 to find out what to do if your insurance company rescinds your policy.
What Is a Rescission Notice from an Insurance Company?
What Is Rescission?
The term “rescission” is probably new to you, but perhaps “rescind” is more familiar. What it means, in summary, is that the insurance company has decided that your coverage was never in effect and it is returning your premiums. This occurs 99% of the time in response to your having submitted a claim for benefits under your life insurance, long-term care, or disability insurance policy. Rather than paying the claim, the insurance company will conduct an investigation and will claim that, if it had known the true information about the insured’s health (or sometimes income), it would not have issued the coverage as applied for.
If you submitted a life insurance claim, the attempted recission must occur within two years of the policy’s issuance. The same holds true for disability or long-term care insurance: the recission must also take place within two years of the issuance of the policy. This time frame applies UNLESS the insurance company alleges you committed fraud, in which case there is no time limit. However, fraud is a very heavy burden for the insurance company to prove.
A key component of a rescission is that the coverage would not have been applied for AS ISSUED. This means that the benefits would not have been the same, or the premiums would not have been the same, had the company known all the facts. A common reason insurance companies give for rescission of some policies relates to the insured’s being a smoker. Almost all life and disability insurance applications will ask if the prospective insured is, or was within the last five years, a user of tobacco. If the applicant says they were not, but in fact they were, the insurance company may have issued the requested coverage, but would have done so at a higher premium. That means the insurance company has a right to rescind because the premium would have been higher.
Rescission Decisions Must be Material to the Risk
Another key component of a rescission is that information the insurance company alleges is inaccurate has to be “material” to the risk. In a very basic sense, “material” means the information must have been substantial enough to affect the insurance company’s decision to issue the policy or the amount of the premium; however, what information is “material” depends on the situation.
For example, most applications will ask when the insured last had a physical exam. Perhaps the insured writes down that it was five years ago and that the exam had no medical findings. Yet, in reality, the exam was six years ago. In this instance, the applicant gave inaccurate information, saying five years instead of six. But that inaccurate statement may not have impacted the insurance company’s decision to issue the coverage as applied for. So, the mere fact of an inaccuracy on an application is NOT, by itself, grounds for rescission. The inaccuracy must be material.
There are many legal decisions discussing what is, and what is not, a material misrepresentation. The courts mostly assume that if a question is asked, it is important to the insurance company. However, courts will look unfavorably on an insurance company’s taking a trivial inaccuracy and trying to bootstrap a recission and claim denial on a meaningless mistake.
A rescinded policy renders it null and void. It’s as if the policy – and the contractual obligations it contains – never existed in the first place.
What Happens if Your Insurance Company Gives You a Rescission Notice?
If your insurance company issues a rescission notice, it MUST also return all premiums you paid from the moment the policy was issued. Rescission releases your insurer from providing you with the coverage the policy included, so the refunded premiums mean any payments you made no longer hold the company in a contractual relationship with you. If you receive a rescission notice, and a check accompanies the notice, you should NEVER cash the check without first consulting with an experienced insurance attorney.
When you receive this shocking news, you may fear what happens next. The peace of mind that was provided by the coverage of your insurance policy just went out the door. You relied on the insurance company to honor their end of the deal and this sudden change may put you in a frightening position.
If your loved one died, you were counting on the life insurance benefits to support you and your family. You’ve already suffered a terrible loss, and in the midst of your grief, you lost financial security you expected to have. Perhaps you’ve had a serious injury on the job or a severe illness and are unable to work. You expected long-term disability benefits to allow you to pay your bills. Instead, your financial stability is at issue.
When Should You Fight a Rescission Notice?
There are legally justifiable reasons for an insurer to rescind your policy. However, sometimes a Error! Hyperlink reference not valid. Rescission notice is sent out by an insurance company for the purpose of denying your claim. This is a strategy to save money and protect the profits of the company. Even if your insurer has legal grounds to rescind your policy, if it doesn’t do so in a timely fashion, that rescission may not be legally valid.
Your best course of action when you get a rescission notice is to contact our attorneys at Kantor & Kantor for legal guidance. We can help you understand whether the notice is valid and, if it is not, can explain how you can fight it.
Does Rescission Mean Cancellation?
In short, no.
In the event of an insurance policy’s being rescinded, as opposed to being canceled or terminated, it’s akin to erasing the contract between the policyholder and the insurance company from existence. Rather than discontinuing the policy midway, the policyholder essentially reverts to square one, as if the policy never existed. Consequently, the policyholder is entitled to a refund of the premiums paid to the insurance company. In contrast, when a policy is canceled, the refund covers only the unused portion for the remaining term.
What Is the Difference Between Rescission and Cancellation?
Here are the elements of a cancellation versus a rescission:
- In a cancellation, coverage ends at a certain date (perhaps due to non-payment of premiums, for example), as opposed to coverage being nullified from the start of the policy contract.
- Benefits end on the cancellation date, but any claims received by the insurance company prior to cancellation must be paid. With rescission, no claims will be paid, even those filed prior to the notice to rescind.
- Only premiums paid after cancellation are refunded, as opposed to all premiums paid since the policy was in force in the case of rescission.
Why Should You Choose Kantor & Kantor?
Learn How Our Rescinded Insurance Policy Lawyers Can Help You
If you need to take on an insurance company that you believe rescinded your policy unjustly, you’ll need a powerful legal team on your side. Kantor & Kantor are not only a highly respected team of attorneys with a strong record of winning, but we are also deeply experienced and knowledgeable. Insurance law is our specialty, and we are extremely well-equipped to fight your insurance rescission.
Our Record of Success
In our over two decades of experience, our attorneys have a history of winning a wide range of complex insurance cases. Our California insurance lawyers have a deep understanding of insurance law and are your best option to fight an unjust notice to rescind your policy.
At Kantor & Kantor, we know you’re a human being facing a difficult, stressful situation. You’re not just a file number. Our empathetic attorneys recognize the challenges that both you and your family face. That’s why we’ll commit ourselves to fighting the insurance company to get you the resolution you deserve. Don’t take our word for it. See what our clients have to say.
We Don’t Flinch if Your Case Goes to Court
In fact, we prepare for it. We know that your case may end up going to trial and have highly skilled attorneys on our team who have extensive experience in court. Fortunately for you, insurers know that’s the case with our Kantor & Kantor team. That’s why an insurance company may want to quickly, and fairly, resolve your case.
Court battles are expensive, and even more so if they lose. When insurance companies face less-experienced attorneys that they know are apprehensive about taking a case to trial, they may negotiate a resolution that favors them instead of you. You have a competitive advantage when you work with Kantor & Kantor.
Our reputation for tirelessly fighting for client rights is well-earned. Speak with fellow legal professionals, seek advice from mediators, or even consult with judges about who to turn to for insurance law representation. We are confident they will point you to Kantor & Kantor. Our strong reputation for standing up to insurance companies is a testament to our commitment and proven record in fighting for the best interests of our clients.
Laws that Protect You When Your Policy is Unfairly Rescinded
California Laws Governing Rescission of Insurance Policies
At the state level, the provisions governing the ability to rescind a contract under insurance laws can be found within California Civil Codes §1688-1693. Within §1691 is a stipulation that a party desiring to rescind a contract is obligated to provide formal notice of their intent to rescind to the opposing party. Moreover, the party initiating the rescission must restore any received items of value from the other party. Typically, this means refunding policy premiums.
Of paramount significance is the timing of the rescission.
The option to rescind a contract is viable only if the rescission is executed promptly upon the discovery of the underlying facts influencing the decision. This means an insurance company must research details in an application at the time it is submitted rather than many months — or years — later when it receives a claim for payment.
What Happens If Your Insurance Is Rescinded?
When a Rescission Notice from Your Insurance Company is Valid
When a policy is rescinded, it is as if the insurance contract never existed, so all premiums must be promptly refunded to you. That means that any claims you submit to your insurer will not be covered by your policy and you will be responsible for paying them.
When insurers review your initial application and contract, they will seek any discrepancies that could warrant policy rescission. This involves a thorough examination of confidential data, including computerized records and various medical documents, all in support of their effort to rescind your policy. This access to your information is legal, as it was granted by you when you signed your insurance application. If your insurer finds misrepresentation on your application in a timely manner, it can rescind your policy.
It’s essential to understand when an insurance company cannot legally rescind a policy.
If you receive a rescission notice, be sure to closely review the reasons. Your insurance policy cannot be rescinded if:
- The alleged false statement, error, or omission is of minimal significance – for instance, a minor error in the contact details on your application.
- You were unaware of a medical condition at the time you completed your application and medical questionnaire.
- The question posed by the insurance company, which they claim was falsely answered, was either vague or overly complex.
Should you receive a rescission notice and believe that the grounds for revoking your insurance policy are inaccurate or irrelevant, promptly reach out to your insurance company in writing. Often, straightforward errors on either side can be resolved easily and quickly. However, if your insurer still maintains its decision to rescind your policy, get help from our team at Kantor & Kantor.
How to Fight an Unjust Policy Rescission
Once you understand why an insurance company may rescind a policy, you can then determine if your rescission notice is valid. If the reason the company provides is not material to their decision to enter into your policy contract, you should contest the rescission. If your insurer claims any other of the above invalid reasons for rescission, you likely have a legal claim and should fight back.
Unfair Life Insurance Rescission Notice
What Does it Mean When a Life Insurance Policy Is Rescinded?
Here is an example. If your life insurance company claims your spouse failed to notify them about her problems with high blood pressure upon submitting a life insurance application and the company uses that as grounds to rescind the policy, you can challenge it. Perhaps her high blood pressure was mentioned in prior appointments with her general practitioner, but she was never prescribed medication or told to take any specific action. She may not have thought it was a medical issue worthy of mention on her application. Then, when she died of a heart attack years later, you suddenly find out the insurer has decided she purposefully withheld information and did not accurately respond to questions on the application for coverage.
Our attorneys at Kantor & Kantor can help you work with her doctor to gather medical records that show that there was no clear action taken to treat her high blood pressure. There may also be no continued documentation of the condition over the years before her death.
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]