General Concepts

Rescission

When an insurer rescinds a policy, it treats coverage as never having been in effect and typically refunds premiums, leaving the insured without protection for any losses that occurred.

Last reviewed: May 2026 · Editorial methodology

Definition

Rescission is the most severe remedy available to an insurer when a policyholder's application contains a material misrepresentation or concealment. Unlike cancellation — which ends coverage going forward — rescission unwinds the contract retroactively. This means any claims paid under the policy could theoretically be clawed back, though many states limit retroactive claim recovery. For example, if a homeowner falsely claimed their house had a security system, and a fire later destroys the home, the insurer might rescind the entire policy after discovering the misrepresentation, potentially leaving the homeowner with nothing but a premium refund. State regulations generally require insurers to pursue rescission within a specific contestability period and to demonstrate the misrepresentation was material. Policyholders facing rescission should consult an insurance attorney, as procedural defects in the rescission process can sometimes defeat it.

Where this term matters

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Tip

Glossary definitions are educational. Always check your own policy language — insurers can define common terms differently from one another. When in doubt, request a written explanation from your agent.

Related terms

MisrepresentationMisrepresentation occurs when a policyholder provides incorrect information — intentionally or accidentally — that materially influences the insurer's decision to issue a policy or set a premium.ConcealmentConcealment is deliberate silence about something significant — distinct from innocent non-disclosure — and can give an insurer grounds to void a policy or deny a claim.RepresentationA representation is a material statement provided on an insurance application that the insurer relies upon when deciding whether and at what price to offer coverage.CancellationCancellation ends a policy mid-term and can be initiated by either party, subject to state-mandated notice requirements and rules about permissible grounds.
Source: Cover Forge USA editorial team|Last verified: May 2026|Methodology
Definitions are educational and may be simplified. Always refer to your policy contract and consult a licensed agent for terms that affect coverage decisions.
CF

Cover Forge USA Editorial Team

Editorial Lead

This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.

Reviewed June 2026

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