THIS IS EXCERPT ONE FROM A LECTURE ON INSURANCE COMPANY BAD FAITH
GIVEN BY ATTORNEY SCOTT MARKS

The Los Angeles Personal injury lawyers of The Marks Law Firm Specialize in Representing Those Experiencing Insurance Company Bad Faith Problems. Mr. Marks has achieved superior results in serious personal injury cases and is a particularly effective insurance bad faith attorney. The Firm has assists residents throughout Southern California including Los Angeles, West Los Angeles, Encino, Woodland Hills, Sherman Oaks, Tarzana, Santa Monica, Reseda

A Plaintiff Perspective on Successfully Litigating
Life and Disability Recission Cases

Rescission is the method whereby an insurance company completely extinguishes the contractual rights of its insured and places the party to the same position he or she had prior to the policy being issued. If a representation is false in a material point the injured party is entitled to rescind the contract from the time the representation becomes false. A representation is false when the facts fail to correspond with its assertions or stipulations.

To justify rescission the insurer must prove the insured made a material “false representation” or “concealment” in the application or other materials submitted with the application for insurance. The burden of proof is on the insurer to establish such concealment or misrepresentation. The materiality of questions and answers in an insurance application is determined “solely by the probable and reasonable influence” which truthful answers would have had upon that insurer.

This is a subjective test. Thus, information is material if it would have caused this particular insurer’s underwriter to reject the application or to charge a higher premium for the policy or amend the policy terms. However, it is important to note that the insurance company’s testimony that it would not have issued the policy, or issued the policy with a greater premium, if the true facts were known, does not rise to the level of an evidentiary presumption: “The trier of fact is not required to believe the ‘post mortem’ (post loss) testimony of an insurer’s agents that insurance would have been refused had the true facts been disclosed.” Thompson, supra, 9 Cal.3d at 916 [emphasis added]; See Also, Imperial Cas, supra, 198 Cal.App.3d at 181.

It must be noted that in cases whereby the insurance company rescinds a policy because of a fraudulent claim, as distinguished from misrepresentations in the insurance application, an objective test is utilized: The materiality of the statement will be determined by the objective standard of its effect upon a reasonable insurer.

It is not necessary that the insured’s misrepresentation at the time of the taking of the application relates, or is otherwise connected to, the loss suffered by the insured after the policy is issued. The issue is whether the insurer would have issued the policy had it known the true facts at the time of the application.