State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
An applicant for individual health insurance knowingly fails to mention a recent hospitalization when asked about it on the application. Under the California Insurance Code, the insurer may:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Concealment is the failure to disclose a material fact, and under California law (CIC Sections 330-339) a concealment — whether intentional or unintentional — entitles the insurer to rescind the policy. A recent hospitalization is material to a health insurance decision. The applicant's duty of utmost good faith includes answering application questions completely and truthfully.
Why the other options are wrong
- B) Rescission voids the policy from the beginning; it is not limited to renewal-date cancellation with notice, which is the remedy for other contract problems.
- C) Silence can be concealment when the applicant had a duty to disclose — the application question creates exactly that duty.
- D) California law does not offer a retroactive premium reduction as a remedy for concealment; rescission is the insurer's remedy.
Memory hook
Concealment = hiding a fact you were asked about. In California, silence can void the whole contract — the policy never really existed.