Can My Health Insurance Company Cancel My Policy?

In insurance-speak, cancelling your policy is known as "rescission." Insurance companies do have the right to cancel your policy, but they have to do so under certain conditions and within certain means. If companies have improperly or unfairly cancelled your policy, you may have a legal case, and consumers do sue companies for questionable rescissions, according to attorney directory site AttorneyPages.

Basics

• Medical care is no doubt costly, and has been growing exponentially. To keep costs down, according to AttorneyPages, companies can use legal rescission to cancel a policy -- in cases where an insured either lied on his application or intentionally left out important health conditions, which have or will result in costly medical procedures. Essentially, using rescission is a way for insurance companies to protect themselves from fraud -- if consumers intentionally lie about their health conditions to qualify for coverage.

Legal Cancellations

• Aside from purposely leaving out medical information or lying about your medical history, according to the U.S. Department of Health and Human Services, your policy may also be cancelled if you fail to pay your premiums on time. Though there may be instances where such late payment may be forgiven, it is still grounds for cancellation.

Questionable Cancellations

• When you pay your premiums every month, you enter into a "good faith" relationship with the insurance company. That said, as long as you keep up with your payments and have not defrauded the company (with misleading or partial information about yourself), there is no reason for the company to cancel the policy. According to the Georgetown University Health Policy Institute, simply getting sick and having substantial medical bills for the company to pay isn't enough reason for cancellation. Such post-claims underwriting and rescissions are the things that lawsuits against insurance companies are made of.

Other Requirements

• By law, you must receive written notification that your policy is going to be cancelled. At that, DHHS reports, your company must give notice of an impending cancellation at least 30 days before the policy is rescinded. That way, you as a consumer are given time to either appeal the decision with your state insurance division, or to find new insurance coverage.