Recommendations for Investigation and Handling of Potential Rescission
he insured and the insurer should be careful when entering into a contract of insurance. Both must recognize that insurance is a contract of the utmost good faith and both parties should be able, in good faith, to rely on the other to neither misrepresent nor conceal facts material to the contract. Clearly, if there is fraud in the inception, the policy will be declared void. Also, because of the need for the utmost good faith, if an insured conceals or misrepresents a material fact the party harmed by the misrepresentation or concealment may unilaterally rescind the policy, return the consideration, and forever be barred from receiving any of the benefits of the insurance.
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