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.
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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 2026-06-14
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