Insurance 101 – Chapter 8 – Volume 26 – Rescission – 2

 Rescission – 2

The courts recognize it is unfair to make an insurer abide by a contract that was not obtained fairly. The ancient maxim that “No one may profit from his wrong” is applied. Rescission is an equitable remedy that was created by ancient ecclesiastical courts in England. Ecclesiastical courts were created for the sole purpose of reaching fair judgments not  necessarily grounded in a strict interpretation of the law. In modern  practice, the trial judge sits as both a court of law and a court of equity, changing hats and methodology as the case requires. Whether a contract should be rescinded is a decision made only by the court sitting as a court of equity. Its direction is to make a ruling that is fair to all parties. When the court grants rescission it always requires that the insured receives a return of the premium it paid so that both parties are in the same position they were in when the contract, now rescinded, was made.

The following video was adapted from my book, “Insurance Claims A Comprehensive Guide” Published by the National Underwriter Company and is available at the Zalma Insurance Claims Library

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