Buzzword: Rescission
Some insurers use recissions to cut and run from contracts -- but California regulators have something to say about that.
Finance ((iStockPhoto))
False promises bring us this week's Marketplace Money Buzzword: rescission.
Rescission usually means cancelling a contract by mutual agreement, but some insurers think it means cancelling when they have to pay up. They sign up customers for a policy, but when a claim is filed, they revoke it.
The companies say they issue rescission only if customers hide information when they apply, but this week, California regulators said insurers can't do it unless they prove a customer intentionally lied. In other words, they might have to use a little more rescission precision.
