Life Insurance Carrier Waived Right to Rescind Policy, Despite Finding Action was Timely Commenced

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Security Mutual Life Ins. Co. v. Rodriguez

(New York State, Appellate Division, 1st Dept.)  May 26, 2009

Although life insurer’s action was not barred by the incontestability clause, the court held it waived its right to rescind the policy after it continued to collect premiums.  There, the insurance carrier commenced an action seeking to rescind a life insurance policy based on the policyholder’s alleged false and misleading representations.  Pursuant to the statutory requirement of New York Insurance Law §3203, the policy contained an incontestability clause barring any action after two years.  Finding General Construction Law §25-a governed, the court held the action was timely where it was commenced on the next business day after the two year period.  Irrespectively, since it continued to collect premiums after it filed the action, the court held the insurer waived its right to rescind the policy.


by Kimberly  E. Whistler and Daniel W. Gerber