Can I pursue a life insurance company if they denied my claim?

UPDATED: Oct 19, 2012

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Can I pursue a life insurance company if they denied my claim?

I have an auto loan with myself as the secondary and my grandmother as the primary. We have credit life insurance on the vehicle and never missed a payment, or had one be late. When my grandmother passed away, they denied my claim stating that the insurance was cancelled because she didn’t answer some health questions. However, they have been charging the bank for payments since we bought the car. Since they are still taking the money and being unfaithful, can I go after them for the claim?

Asked on October 19, 2012 under Insurance Law, Michigan


Howard Shernoff

Answered 10 years ago | Contributor

It sounds as if the insurance carrier has executed what is called a rescission of the insurance policy. Companies do this when they receive a claim and then go back and re-scrutinize the insurance application and find a discrepancy. They then tell the claimant that they never would have issued the coverage had they known the true facts. The laws governing rescissions vary from state to state and even according to the type of insurance. In California, for example, if the insurer rescinds the policy, it must return all the premiums. Also, in most states, including California, the insurer is not allowed to rescind if the policy is more than two years old. Many rescissions are improper and can be challenged by legal action, such as a lawsuit for bad faith, because they result in – or are executed in order to engineer – an unreasonable claim denial.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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