Are policy cancellation and rescission considered the same thing?

Policy cancellation and rescission are distinct concepts in the realm of insurance. Cancellation refers to the termination of an insurance policy before its expiration date, which can be initiated by either the insurer or the policyholder. This termination typically involves a straightforward process where notice is given, and depending on the timing of the cancellation, there may be financial implications such as refunds for unearned premium.

Rescission, on the other hand, is the legal act of voiding a policy from its inception due to misrepresentation, fraud, or material non-disclosure by the insured. When a policy is rescinded, it is treated as if it never existed, meaning that the insurer is not obligated to pay any claims, and the insured loses all the benefits of the contract. Rescission usually comes into play after a policy has been in effect, indicating a deeper legal issue rather than just a termination by agreement.

Given these definitions, it is clear that cancellation and rescission serve different purposes and implications in insurance law. Therefore, the assertion that they are considered the same thing is incorrect.