Sadly, the first thought that crosses the mind of many insurance adjusters when a claim is made is how it can be denied. At the top of the list of the ways to deny claims is rescinding the insurance contract.
Black's Law Dictionary defines rescission as an act "where a contract is canceled, annulled, or abrogated." An insurance policy can be rescinded before or after a claim is made. Insurance companies prefer to wait until after a claim is made. The longer they wait, the more money they receive in premium payments. If no claim is made, the carrier keeps all the premiums and pays out nothing. If a claim is made, the carrier rescinds and refunds only those insurance premiums paid to keep the policy in effect after the rescission. Heads we win, tails you lose.
Thanks to favorable legislation and case law, it is surprisingly easy for insurance companies doing business in Florida to rescind policies. Among the more popular excuses is misrepresentation. Florida Statute 627.409 (2010) allows rescission on this basis if the carrier can show the following:
a) The misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer.
(b) If the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith would not have issued the policy or contract, would not have issued it at the same premium rate, would not have issued a policy or contract in as large an amount, or would not have provided coverage with respect to the hazard resulting in the loss.