Homeowners insurance policy rescission: What you need to know

Personal Injury - October 27, 2023

Your home is one of your most important possessions for more than its monetary value. It’s where you and your family should feel safe and protected. However, your homeowners’ insurance company may destroy that sense of security by terminating your policy without your permission. When this happens, you need guidance from our Chicago personal injury attorneys to make it right.

Do not face a policy rescission without help. You may lose the ability to reinsure your property if you don’t take the right steps immediately.

Rescission of insurance definition

Rescission is a special kind of policy cancellation in Illinois. It voids your coverage dating back to the beginning of your contract with the company. Essentially, it’s as if you never had coverage from them at all, and they will return all premiums you paid.

A rescission of your policy is not the same as when it is canceled or not renewed. Rescission indicates the policy was flawed or invalid from the beginning. The insurance company may claim that they were given false information by the homeowner, which led to them providing coverage when they shouldn’t have. The information must be “material” or crucial to the contract.

For example, suppose the insurance company claims that the homeowner lied about the construction of the home such that it was not up to fire safety codes. In that case, they may rescind the policy. However, if you can show proof that your home was up to code in all aspects when the policy was issued, you can fight to have your coverage reinstated.

Why do insurance companies do this?

Insurance companies frequently use rescission as a way to get out of paying claims. So, getting all the money you paid into your policy might sound good at first, but this can pale in comparison to damages and repairs after a fire, windstorm, flooding, or other catastrophe. You are left footing those bills out of pocket since your policy was canceled.

Other ways your policy could be ended include:

• Cancellation: The insurance company terminates your coverage before the policy end date.
• Non-renewal: The insurance provider declines to renew your policy when the expiration date arrives.

If your policy is canceled in any of these ways, including rescission, it may also make it much harder for you to get coverage through another insurance provider.

What to know in Illinois about a rescission of your insurance policy

If your insurer has rescinded your insurance policy, you may feel helpless. Depending on whether the policy was canceled, not renewed, or rescinded, you have certain rights that must be protected. If the company is trying to get out of paying for a claim you filed, the rescission is not set in stone. It is possible to appeal that decision.

Just like appealing a denied claim, you need to examine the reasons they provided for the rescission and provide evidence negating their arguments. Since they know a lot more about the insurance industry than you probably do, it can be useful to speak with an attorney to understand your options. Insurance companies will try any number of sneaky tactics to take the blame off themselves and put it on you.

What to do if you receive a rescission notice from your insurance company

When your policy is rescinded, you will receive a notice from your insurance carrier. If they fail to provide clear explanations for their decision, you can demand they send their reasons in writing. This is already a strike against them and a plus for your case.

Next, you should speak with an experienced insurance denial attorney. They can assist you in gathering evidence to demonstrate your side of the situation. Removing your insurance coverage unfairly could be considered a bad faith action, and a personal injury lawyer in Chicago, IL can work to secure the justice you deserve.

You and your attorney can examine all relevant documentation and information to support your claim that the insurance company unfairly rescinded your policy. With robust evidence and a compelling story, you can push back when they are trying to escape paying for a valid claim. You can even request compensation for your financial losses, emotional distress, and other damages you suffered because of their unfair actions.

Learn more about how to fight back against a rescission on your Illinois homeowners’ insurance

If your homeowner’s insurance provider unexpectedly responds to your valid claim on your policy by rescinding your coverage, you need help determining if you are being treated unfairly or even illegally. Our personal injury lawyers in Chicago, IL, will investigate your circumstances and apply our background and training in insurance law to hold them accountable.

We work to protect homeowners from bad-faith insurance practices. If your rights have been violated, schedule a free consultation in our offices by calling (800) 985-1819 or using our convenient online form to meet with us today.