Insurer Estopped from Seeking Recission of Life Policy for Collection and Retention of Premiums
In an action to rescind life insurance policies for fraud and misrepresentation, a New York appellate court recently held that although the action was timely filed within the statutory two-year incontestability period, the insurer was estopped from seeking rescission for having collected and retained nine premium payments after commencing suit.
In Security Mutual Life Insurance Company of New York v. Rodriguez, defendants purportedly purchased three life insurance policies worth $20 million from Security Mutual agents who, prior to the commencement of the action, had pled guilty to insurance law crimes in connection with the issuance of life insurance policies. 2009 WL 1444524 (1st Dep’t May 26, 2009). The action for rescission and fraud alleged that defendants, in conjunction with the agents, procured the policies by providing false and misleading financial and medical information. On a motion to dismiss the complaint, defendants argued the action was untimely and that the insurer had waived its right to rescind the policy and had failed to plead fraud with sufficient particularity.
