Rescission

Since California first enacted state statutes the equitable remedy of rescission has been available to contracting parties if the contract was entered into as a result of fraud, concealment of material fact or misrepresentation of material fact. The California Supreme Court and courts of appeal have consistently enforced the right of insurers to rescind policies of insurance even if the facts misrepresented or concealed were made innocently and without an intent to deceive.

 

The California courts of appeal continued the age-old practice in recent years.

 

The cases cited reveal that rescission, as an equitable remedy, is alive and well in California regardless of the attempts of the Plaintiffs’ bar to destroy it. To effectively rescind a policy of insurance it is important that the insurer conduct a thorough investigation and apply the facts and law fairly before a decision is made.

 

Insurers 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.

 

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