James T. Nyeste Attorney at Law CoverageLaw.com
Many insurance companies have adopted a practice known as “retrospective underwriting” whereby, after the policyholder seeks coverage for a claim, the insurance company rescinds or cancels the policy after it already has been issued or reforms or amends the terms of coverage already in effect. Typically, the insurance company contends that the policyholder withheld or misrepresented information when he or she applied for the coverage, even though the applicant may not have understood the questions or may not have even seen or heard them.
The practice of rescission can have dire consequences for insured individuals. The insurance company will refund the premiums, but this amount usually is far less than the amount of the claim.
When coverage is sought for a claim, the insurance company may for the first time look at the policyholder’s application and history to determine whether it should have actually issued the policy – thus the phrase, “retrospective underwriting.”
Whether the insurance company’s decision to rescind the coverage is actually legal generally depends on whether the insured committed fraud or made an intentional misrepresentation of material fact. Nevertheless, insurance companies aggressively pursue any chance to rescind coverage.
Too many Americans find themselves in the compromised position of having been dropped by their insurance company, just when they need the coverage they have been paying for and depending on. Their only consolation is a premium refund check issued by their insurance company, which is almost never enough to begin paying for the claim or loss. Even if they appeal the rescission to a higher level within the insurance company, the chances of another denial are almost guaranteed if they don’t use an insurance attorney. Hiring an insurance attorney in Chicago to fight for their insurance coverage will increase their chances on appeal, or if they proceed to a lawsuit.
Hiring an insurance attorney in Chicago to hold insurance companies accountable for their responsibility to pay for claims can be the best way to successfully oppose a rescission. An insurance attorney in Chicago has a thorough understanding of insurance practices, especially those taken in bad faith. The insurance attorney will guide the client through the appeals process and fight to have coverage reinstated and the claim paid.