Insurance Companies May Retroactively Cancel Your Policy

Some policyholders may find that instead of receiving the benefits of their insurance policy claim, they receive a full refund of their premiums paid – but while a full refund sounds great, it comes at the cost of your policy. Instead of paying out claims, insurance companies may decide to rescind the policy itself. This eliminates the obligations of the insurance company and your chances of receiving your claim, leaving some policyholders in the dust when they need assistance most.

How Does Rescission Work?

When a company decides to rescind a policy, they send a notice to the policyholder that they deem the policy invalid from the beginning, usually based on some detail that is claimed to be false. For instance, these companies frequently claim that a condition you filed a claim for existed at the time of your application and because it wasn’t accounted for, eliminates the validity of your plan. Many companies will make this claim to avoid paying their policyholders, even if the condition has gone undiagnosed for years. They must return to the policyholder all of the premiums they paid for the plan, and from that point, the contract is completely reverted.

If you receive a rescission notice, your first step should be to contact an experienced attorney. Companies are not allowed to rescind policies if the policyholder was not aware of or did not understand the condition which caused the rescission, or if the condition is not significant to their contract. Insurance companies may only rescind a policy if the policyholder was found to intentionally misrepresent themselves or to have committed fraud in their application. If you were not aware of the condition at the time, the insurance company has no right to rescind your policy. Rescissions usually come after a client has filed for an insurance claim, and are often used to avoid paying out claims to legitimate policyholders.

Insurance rescission is explicitly made illegal in the Affordable Care Act, but many companies continue to use it as a means to avoid paying out claims. Only plans that are ACA-compliant fall under this law, and so it’s recommended to choose a plan backed by the ACA to help provide protection against rescission. If an ACA-compliant plan attempts recision in response to a claim, you should get in contact with an attorney immediately to start the process of appealing the decision and holding the company accountable.

If you’ve been denied an insurance claim by rescission, we can help. We have the experience fighting against the insurance companies to secure the claims our clients deserve. Contact Carla D. Aikens, P.L.C. today for assistance with your case.

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