Insurance Policy Rescission; When, How and Why?
Insurance companies are very adept at documenting the information provided when a policy is purchased. They record calls and maintain the application for insurance. They generally do not research whether the information provided by the insured is accurate until after a claim is filed. If an insurance company determines that materially false representations were made when the policy was purchased, it has an option known as “rescission.” This action cancels the insurance policy and permits the insurance company to reject any claims made under the policy.
A misrepresentation is material if the insurer would have rejected the risk or charged an increased premium and would not have issued the same contract had it been given the correct information. Oade v Jackson Nat'l Life Ins. Co. of Mich., 465 Mich. 244, 255 (2001).
Any claim or defense asserted by the insured that “the agent prepared the application and we just signed it,” fails as a matter of law. “Michigan law presumes that one who signs a written agreement knows the nature of the instrument so executed and understands its contents. Moreover, mere failure to read an agreement is not a defense in an action to enforce the terms of a written agreement.” Watts v. Polaczyk, 242 MichApp 600, 604 (2000). See also: Montgomery v. Fidelity and Guarantee Life Ins Co, 269 MichApp 126, 130 (2005) holding that “[i]t is well established that failure to read an agreement is not a valid defense to enforcement of a contract. A contracting party has a duty to examine a contract and know what the party has signed, and the other contracting party cannot be made to suffer from neglect of that duty.”
If you are purchasing an insurance policy, make sure that all of the information provided is accurate. Read any application for insurance to make sure everything in the application is accurate. If it is not, make the necessary corrections before signing. Otherwise, you may end up with no insurance if you make a claim under the policy.
About Alexander & Angelas, P.C.
Attorney Peter A. Angelas represents litigants in complex, high severity civil liability litigation across Michigan. His practice areas include automobile and trucking negligence claims, insurance litigation, premises liability, motor carrier liability, commercial litigation, construction defect litigation, insurance coverage disputes, emergency casualty response services, alternative dispute resolution, subrogationclaims, workers’ compensation, employment law, and marine liability.
Mr. Angelas practices in all state and federal courts in Michigan, including WayneCounty (Detroit), Macomb County (Mount Clemens), Oakland County (Pontiac),Washtenaw County (Ann Arbor), and Genesee County (Flint).
A 24/7 Emergency Hotline is available (800-219-0007). When an accident requires an immediate response to protect evidence, members of the firm quickly launch aninvestigation with the assistance of well-qualified accident investigators, crash re-constructionists, mechanical engineers, civil evidence photographers, and independent adjusters positioned throughout Michigan.
