Rescission

Investigation Required to Effect Rescission

Lack of Truth Requires Rescission of Insurance

An insurer faced with an application that appears to contain false representations that would have been material to the decision to insure or not insure, must protect itself and, before deciding to rescind, complete a thorough investigation. 

A thorough investigation should include the following:

1.    A recorded statement or examination under oath that asks every question asked on the application for insurance.

2.    Collection of documents that establish the veracity of each and every question on the application.

3.    A query to the ISO All Claims database to determine if the insured incurred any losses or made any claims not disclosed on the application.

4.    A recorded statement of every witness to the application process including:

a.     The insurance agent.

b.    The insurance broker.

c.     The underwriter who agreed to the policy.

d.    The surplus line broker if one was used.

5.    A recorded statement of witnesses to the loss or claim.