Wrongful repudiation of an insurance policy is the illegal action by an insurance company of canceling a health, life, automobile, or property insurance policy. Aside from completely canceling an insurance policy, an insurance company has also wrongfully repudiated an insurance policy if they:
- Deny the existence of the policy,
- Refuse to comply with the terms of the policy,
- Seek to change to terms of the insurance policy without your consent,
- Intend not to perform their obligations under the policy,
- Fail to adhere to the established customs as related to the insurance policy, or
- Fail to renew the policy without providing a reason for doing so.
Most states allow you to sue an insurance company if the company has wrongfully repudiated your insurance policy. The majority of lawsuits for wrongful repudiation of an insurance policy are based largely on breach of contract law. There are generally three different approaches that a victim of a wrongful repudiated insurance policy can take:
- Treat the insurance policy as terminated, or rescinded, and sue for any appropriate damages,
- Sue the insurance company to enforce the existing policy, or
- Wait until the terms of the insurance policy have matured and sue the insurance company for damages.
A few states even allow you to rescind an insurance policy and sue for damages if the insurance company has not yet actually wrongfully repudiated on the policy, but you have reason to believe that they will do so in the future. This action is called an anticipatory repudiation. You should take extreme caution in this area because it could end up that you are the one in breach, and the insurance company could sue you.
Even though a lawsuit for the wrongful repudiation of an insurance policy is very similar to a breach of contract case, the damages available in a wrongful repudiation lawsuit are slightly different that those available for a breach of contract case. In most cases, damages for a wrongful repudiation lawsuit can include:
- Any damages you suffered during the time you were covered by the insurance policy, including monetary loss and pain and suffering,
- Punitive damages against the insurance company,
- Damages prescribed by a statute, and
- The benefits you have forthcoming under the policy minus the premiums you paid, or
- Recovery of all the premiums you paid, but none of the benefits you are owed.
If you think your insurance policy was wrongfully repudiated, it is strongly recommended that you contact an experienced financial attorney who deals with insurance law. Only an attorney will be able to adequately explain the issues and help defend your rights.