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Rescission is an Important Remedy to Avoid Fraud   

Never Rescind a Policy Without a Thorough Investigation and Advice of  Counsel 

https://zalma.com/blog

Insurers must use the rescission remedy with care. Insurers should never  assume that the promise to pay indemnity to the insured under a policy  of insurance can, with impunity, be broken by advising the insured that  the insurer has rescinded the policy.  Rescission without sufficient evidence is wrongful. Rescission without  the advice of competent counsel is a tactic fraught with peril.   Rescission without a thorough investigation is dangerous. Where no valid  ground for rescission exists, the threat or attempt to seek such  relief, may constitute a breach of the covenant of good faith and fair  dealing which is implied in the policy and expose the insurer to tort  damages for that breach, including punitive damages.  One plaintiffs\\u2019  lawyer became wealthy when he learned that claims people were given a  rubber stamp that said \\u201cRESCISSION\\u201d and had no idea what it was. He  would take the claims person\\u2019s deposition and ask them to spell the  word. When the claims person failed his bad faith case was established.  When they spelled the word correctly, he would ask the adjuster to state  the elements necessary to effect a rescission. Almost none could  answer.  California, with a Draconian rescission law, still make it clear that if  an insurer elects rescission without sufficient evidence it will bring  the wrath of the courts down on it and will be the basis for  allegations, easily proven, of extra-contractual torts. [ Imperial  Casualty & Indemnity Co. v. Sogomonian (1988) 198 Cal.App.3d 169,  184, 243 Cal. Rptr. 639.]  If sufficient evidence exists, the rescission remedy will deprive the  insured or the insurer of all rights under the policy. The court will  conclude that the contract never existed and neither party has any right  under the contract.      \\xa9 2021 \\u2013 Barry Zalma  Barry Zalma, Esq., CFE, now limits his practice to service as an  insurance consultant specializing in insurance coverage, insurance  claims handling, insurance bad faith and insurance fraud almost equally  for insurers and policyholders. He also serves as an arbitrator or  mediator for insurance related disputes. He practiced law in California  for more than 44 years as an insurance coverage and claims handling  lawyer and more than 52 years in the insurance business. He is available  at http://www.zalma.com and zalma@zalma.com.  Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE  Legend Award.  Over the last 53 years Barry Zalma has dedicated his life to insurance,  insurance claims and the need to defeat insurance fraud. He has created  the following library of books and other materials to make it possible  for insurers and their claims staff to become insurance claims  professionals.  Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library \\u2013 https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/  podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4