What does Nonrescission Provision mean? Read on to discover the definition & meaning of the term Nonrescission Provision - to help you better understand the language used in insurance policies.
A provision sometimes included within liability policies stating that the insurer cannot rescind the policy for any reason. Such provisions are often contained within Side A directors and officers (D&O) liability policies and, less frequently, in D&O policies written to cover privately held and nonprofit corporations. (Side A policies are those covering only the personal liability of the directors and officers rather than the liability of the corporation to indemnify them for their acts.) If an insurer rescinds a policy, it is treated as though the policy never existed, and the insurer must refund the full premium to the insured. Therefore, nonrescission provisions are advantageous for insureds.
We hope the you have a better understanding of the meaning of Nonrescission Provision.