Watch the full video at https://rumble.com/v2py44q-rescission-of-insurance.html and at https://youtu.be/tydWd16yZOk
Insurers must use the lifting agent with caution. Insurers should never assume that the promise to pay compensation to the insured under an insurance policy can be broken with impunity by notifying the insured that the insurer has canceled the insurance.
Revocation without sufficient evidence is wrongful. Termination without the advice of competent counsel is a tactic fraught with danger. Termination without thorough investigation is dangerous. If there is no valid basis for rescission, the threat or attempt to seek such relief may constitute a breach of the covenant of good faith and fair dealing implied in the policy and subject the insurer to damages for that breach, including punitive damages.
A plaintiff’s attorney got rich when he found out that claims people were given a rubber stamp that said “RESCISSION” and had no idea what it was, what it took to prove rescission, and even how to spell “rescission” jurors got angry and punished insurers.
The policyholder’s attorney would take the claimant’s deposition and ask them to spell the word. When the claimant failed, his bad faith case was established. When they spelled the word correctly, he would ask the adjuster to indicate the elements necessary to produce a rise. Almost no one could answer correctly.
If there is sufficient evidence, the rescission action will deprive the insured or the insurer of all rights under the policy. The court will conclude that the agreement never existed and that neither party has any rights under the agreement.
Where an insurer has provided undisputed evidence that the disclosure of potential claims or proceedings is material to it in underwriting professional indemnity insurance and as explained by its underwriters, the nature and circumstances giving rise to a potential claim or suit affect whether the underwriter will increase the premium which is charged for the insurance, change the insurance terms or reject the application without a quote.
The question of application clearly sets an objective standard, not just the insured’s subjective assessment of the likelihood of suit. From an objective point of view, any experienced civil litigator would know that the attitude of a client or former client who has suffered a loss in court can quickly go from acceptance to accusation, especially after consultation with independent counsel.
Without specific and admissible evidence, the revocation will fail. A thorough investigation that gathers admissible evidence and in full compliance with state law must be conclusive before an attempted seizure is made.
Adapted from my book
(c) 2023 Barry Zalma & ClaimSchool, Inc.
Subscribe and receive videos limited to Excellence in Claims Handling subscribers at locals.com https://zalmaoninsurance.locals.com/subscribe.
Please consider subscribing to my publications on substack at https://barryzalma.substack.com/publish/post/107007808
Go to Newsbreak.com https://www.newsbreak.com/@c/1653419?s=01
Barry Zalma, Esq., CFE, can be found at http://www.zalma.com and zalma@zalma.com
Follow me on LinkedIn: www.linkedin.com/comm/mynetwork/discovery-see-all?usecase=PEOPLE_FOLLOWS&followMember=barry-zalma-esq-cfe-a6b5257
Write to Mr. Zalma at zalma@zalma.com; http://www.zalma.com; http://zalma.com/blog; daily articles are published on https://zalma.substack.com. Access the Zalma On Insurance podcast at https://podcasters.spotify.com/pod/show/barry-zalma/support; Follow Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos on Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.
