Insurance is, and has always been, a business of the utmost good faith requiring ethical conduct by insurers when dealing with their customers: the insureds. To do so requires an understanding of ethics and how ethical behavior controls the business. Similarly, the person insured is required to also deal with the insurer with the utmost good faith. If a policy is acquired by misrepresentation or concealment of material facts the insurer may have the right to rescind the policy from its inception, return the premium collected, and treat the policy as if it never existed. The two books will help the insurance professional understand how to maintain an ethical moral compass and what can be done when an insured fails to act ethically to the insurer.
Methods for Insurers and their Personnel to Act with the Utmost Good Faith
Rescission of Insurance
Rescission is an equitable remedy as ancient as the common law of Britain. When the United States was conceived in 1776 the founders were concerned with protecting their rights under British common law. They adopted it as the law of the new United States of America modified only by the limitations placed on the central government by the U.S. Constitution approved in 1789. The viability and ability to enforce contracts was recognized as essential to commerce. Courts of law were charged with enforcing legitimate contracts. Courts of equity were charged with protecting contracting parties from mistake, fraud, misrepresentation and concealment since enforcing a contract based on mistake, fraud, misrepresentation or concealment would not be fair. The common law developed rules that courts could follow to refuse to enforce the terms of a contract that was entered into because of mutual mistake of material fact, a unilateral mistake of material fact, the breach of warranty (a presumptively material promise to do or not do something), a material concealment, or a material misrepresentation. The remedy – called rescission – created a method to apply fairness to the insurance contract and allow an insurer to void a contract and allowed courts to refuse to enforce such a contract entered into by misrepresentation or concealment of material facts.
Read about these and other insurance books by Barry Zalma at http://zalma.com/zalma-books/