Under the California Insurance Code, which of the following gives an insurer the right to rescind a policy?

Why D is correct

California law allows an insurer to rescind when a representation is false in a material point, regardless of whether the applicant intentionally misled the insurer. Rescission voids the contract from the start, returning the parties to their pre-contract positions. The key limitation is that the misrepresentation must be material, because immaterial errors do not justify voiding the policy. Post-issuance events such as a change in occupation are handled by the policy's own terms and do not create rescission rights for the insurer.

Why the other options are wrong

• A) Only material misstatements give grounds for rescission. Immaterial errors do not void a policy because they do not affect the insurer's underwriting decision. An immaterial error does not affect the underwriting decision, so it cannot justify voiding the policy.
• B) Changes occurring after issuance are governed by the policy terms, such as occupational changes. They do not give the insurer a right to void the entire contract. Post-issuance changes are addressed by policy provisions and renewal decisions, not by rescinding the original contract.
• C) Cancelling a rider is a normal policyowner right. Exercising a contractual right does not create a ground for the insurer to rescind. Dropping a rider is an exercise of a contractual right and gives the insurer no basis to void the whole policy.

Memory hook

Rescission = un-issuing the policy. A material lie, known or not, can rip the contract up.