Los Angeles Insurance Rescission Lawyer

Few things are more difficult to bear than discovering that an insurance policy has been rescinded. Insurance can provide an essential safety net during an illness or after an accident, and consumers rely on insurance companies to keep their word and honor their policies.

California law allows parties to a contract to issue a rescission on insurance policies, but only under specific circumstances. A Los Angeles insurance rescission lawyer can help anyone who has had their policy rescinded by an insurance company after making a claim to collect compensation. Call an experienced attorney today to schedule a consultation.

Page Contents:

• Denial of Insurance Policies in Los Angeles
• Defining a Rescission
• Recoverable Damages in an Insurance Rescission Lawsuit
• How a Los Angeles Insurance Rescission Attorney Could Assist
• Rescission and Cancellation FAQs
  • What Happens if Your Insurance Policy is Rescinded?
  • Can My Insurance Company Cancel My Policy for Any Reason?
  • When Should You Fight a Rescission Notice?

Denial of Insurance Policies in Los Angeles

Often, in order to issue a policy, an insurance company will ask questions of the new customer, relying upon their answers to make a decision concerning whether to issue a policy. When the time comes to make a claim, however, insurance companies may take whatever steps necessary to deny a claim and keep their profit margins high.

This includes denying claims using the excuse that they issued a policy based upon incorrect information. The company then denies both the claim and the fact that the policy was ever valid. This concept, known as rescission, means that the insurance company is arguing that the policy would have never been granted in the first place if they had proper information.

Defining a Rescission

A rescission is a legal concept that allows any person to terminate a contract if they find they entered into the contract because of fraud, omission, or some other form of false information. For example, a health insurer may rescind a recently issued policy if they learn that the applicant misstated their age on the application.

The insurance laws allowing a party to rescind a contract are contained in California Civil Code §1691. This statute states that a party wishing to rescind a contract must give notice of their intent to rescind to the other party. Additionally, the rescinding party must return anything of value that they receive from the other party, including policy premiums. Most important of all, a party that wishes to rescind a contract can only do so promptly after discovering the facts that led to them making this decision.

Recoverable Damages in an Insurance Rescission Lawsuit

The available remedies for people who have their policies rescinded in an untimely or illegal manner are provided in California Civil Code §1692. Here, the law states that a party may bring a suit to recover any money or item owed to them by any party because of the rescission.

When viewed through the lens of an insurance policy rescission, this typically includes the reimbursement of all premiums paid to the insurance company minus any benefits received under the policy. A Los Angeles insurance rescission lawyer can help people determine the value of a potential lawsuit and accurately frame their damages in settlement negotiations.

How a Los Angeles Insurance Rescission Attorney Could Assist

When you suffer a loss and turn to your insurance company for payment, it can be a shock to learn that the insurance company is denying the claim using the excuse that the policy has been rescinded. This denial of coverage can be catastrophic if you are in poor health or have recently suffered property damage.

Not only is this poor business practice, but under California law, it may be illegal depending on the circumstances. While it is possible to rescind an insurance policy, the rescission must be done as soon as the concerning information is discovered. Additionally, the insurance company must return all premiums paid by the customer.

When insurance companies violate either of these requirements, a Los Angeles insurance rescission lawyer can help. An attorney works to hold insurance companies responsible for their actions and to recover the compensation that you deserve.

Rescission and Cancellation FAQs

What Happens if Your Insurance Policy is Rescinded?

If your insurance policy is rescinded, that means it has been retroactively voided, meaning it is treated as if it did not exist, and you are not covered for any claims that may have occurred. The insurer must return all the premiums you paid, and you will be responsible for securing new coverage to avoid being uninsured. If you have received a rescission notice and a premium refund check, do not cash the check without first consulting an experienced insurance attorney. 

It can be difficult to obtain new insurance following a cancellation. Rescission is typically due to material misrepresentation or concealment of facts on the application, although the ACA has limited rescission in health insurance. Rescission retroactively voids a policy, while cancellation terminates a policy from a specific date forward. 

Can My Insurance Company Cancel My Policy for Any Reason?

Insurance companies cannot cancel a policy for any arbitrary reason, although they do have more flexibility in the first 60 days of a policy. After the initial 60 days, cancellations are limited to specific, justifiable reasons like non-payment of premiums, fraud, or material misrepresentation. Cancellation can also occur because of a violation of the policy’s terms or conditions or an increased risk to the insurer, although state laws sometimes restrict reasons for cancellation and non-renewal. During the first 60 days of a new policy, insurers can typically cancel for almost any reason, although this varies from state to state.  

When Should You Fight a Rescission Notice?

There are specific situations when you should absolutely fight a rescission notice, including:

• Your policy has been in effect for more than two years; in California, an insurer cannot rescind a health insurance policy once it has been in place for 24 months or longer, with very limited exceptions. 
• The reason for the rescission is not intentional misrepresentation or fraud; a rescission can only be based on fraud or deliberately lying about a material fact in your applications. A minor error or misstatement does not rise to that level. 
• You believe your insurance company acted in bad faith after you filed an expensive claim. 
• Your insurance company did not provide proper notice of the rescission; insurance companies are required to provide at least 30 days’ written notice via certified mail prior to rescinding an insurance policy.