State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Which of the following, if material, gives a California insurer the right to rescind an insurance contract?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under California law the insurer may rescind for a material concealment (Section 331), a material misrepresentation or false representation (Sections 359 and 358), or the breach of a material warranty (Section 447). These are the statutory grounds — each requires a false or withheld statement material to the risk. Rescission treats the contract as void, restoring the parties to their original positions.
Why the other options are wrong
- B) Switching agents has no legal effect on the contract's validity; the policy remains in force with the same insurer.
- C) A rating bureau rate increase is an external pricing event, not a ground for avoiding an existing contract.
- D) Failing to read the policy is the insured's own responsibility and may limit the insured's remedies, but it is not a ground for the insurer to rescind.
Memory hook
Rescind for a material lie: concealment (hid it), misrepresentation (stated it wrong), warranty (promised and broke).