How long does one have to report a mistake?
That is, if the Insurance Company wrote up the wrong policy and no one noticed for a long time?
For a mistake to affect the validity of a contract it must be an “operative mistake“, ie, a mistake which operates to make the contract void. The effect of a mistake is:
At common law, when the mistake is operative the contract is usually void ab initio, ie, from the beginning. Therefore, no property will pass under it and no obligations can arise under it.
Even if the contract is valid at common law, in equity the contract may be voidable on the ground of mistake. Property will pass and obligations will arise unless or until the contract is avoided. However, the right to rescission may be lost.
Unfortunately, there is no general doctrine of mistake – the rules are contained in a disparate group of cases. This is also an area of confusing terminology. No two authorities seem to agree on a common classification, and often the same terminology is used to cover different forms of mistake.
A mutual mistake is one where both parties fail to understand each other.
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How does this apply to an Insurance Contract?
The rescission agreement page 36 of our specimen policy allows the Insurance Company two years to find an error and be able to cancel the policy.
Rights & Responsibilities Page 177 of Specimen Policy
Give the Insurance Company your thoughts and ideas about any of the rules of this plan and in the way it works.
Make complaints or appeal about: our organization, any benefit or coverage decisions we make, Your coverage,
or care received
Read and understand, to the best of Your ability, all information about Your health benefits or ask for help if You need it.
Interpretation of Contracts
In cases of uncertainty not removed by the preceding rules, [1635 – 1663] the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist. Cal.Civ.Code § 1654
1636. A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.
1639. When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible; subject, however, to the other provisions of this Title.
1640. When, through fraud, mistake, or accident, a written contract fails to express the real intention of the parties, such intention is to be regarded, and the erroneous parts of the writing disregarded.
1644. The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.
1649. If the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promisee understood it.
Statue of Limitations?
4 years on a written contract –
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