Pursuant to Florida Statute Section 627.409, an insurer can retroactively rescind a policy if it later finds a material misrepresentation in the application for insurance. A misrepresentation is "material" if the misrepresentation was material to the acceptance of the risk by the insurer, or, if the insurer in good faith would not have issued the policy under the same terms and premium.
In United Automobile Insurance Company v. Salgado, _____ So.3d. _____ (Fla. 3rd DCA August 5, 2009), the PIP insurer discovered a material misrepresentation after its insured presented it with a PIP claim. The PIP insurer then rescinded the policy, pursuant to 627.409. The County Court held that a PIP insurer was not entitled to retroactively rescind a PIP policy pursuant to 627.409. In essence, the County Court reasoned that PIP is a statutorily mandated coverage and pursuant to the PIP statute claims can only be denied prospectively, not retroactively. The Circuit Court, sitting in its appellate capacity, affirmed.
The 3rd DCA reversed, holding that, pursuant to 627.409, a PIP insurer can retroactively rescind a PIP policy if it meets the requirements of 627.409.