What does Reformation mean? Read on to discover the definition & meaning of the term Reformation - to help you better understand the language used in insurance policies.
A remedy available to an insurer when an otherwise valid insurance policy does not, as written, fully or accurately express the agreement of the insurer and the insured because of fraud, inequitable conduct, or mutual mistake. When the policy fails to accurately express the parties' intent in such instances, a court may reform the policy to express the actual nature of the agreement between the parties. For example, if a consultant substantially understated his annual revenues on an application for professional liability coverage, an insurer could seek reformation of the insurance policy to more accurately reflect the consultant's revenues and therefore allow the insurer to charge a higher premium.
We hope the you have a better understanding of the meaning of Reformation.