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Insurance recission can happen at worst possible moment

Having insurance is supposed to bring Florida residents peace of mind that they will be covered in case of death or disaster. However, it is important to remember that private insurance companies are businesses. Like any business, in general their first priority is making as much of a profit as possible.

The business strategy of many insurance companies includes the recission of insurance policies for various reasons. This can include failure to keep up on premiums or foul play by the insured party. But it can also include “material misrepresentation,” as judged by the insurer.

In other words, if the insurance company claims that you withheld important information when applying for your policy, it can cancel it. Limitless recissions are against the law in most places, but some states allow insurers to rescind policies as late as two years after issuing the policy.

This can mean that a policy the insured party was counting on may not be honored. In one case, American General Life Insurance Co. rescinded the policy of a man who was diagnosed with ALS months after he took it out. The company claimed that the man did not disclose bipolar disorder and a lung disease, but his doctors said he had neither condition at the time.

The insurer refused to make good on the man’s insurance policy after he died. It and the man’s widow eventually settled the dispute.

The death of a spouse or having your house damaged in a natural disaster often leaves you at your most vulnerable. It is the exact moment you count on your insurance, so to be wrongfully denied a claim can be devastating.

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