Non-rescission clause

The non-rescission clause is a D&O (directors and officers) policy clause by which the insurer waives its right to void the contract for misrepresentation. It applies entirely, or only to Side A and to insureds unaware of the facts. Article L. 113-8 of the French Insurance Code voids the contract when the insured made an intentional misrepresentation that changes the subject of the risk or lessens the insurer's view of it. The premiums paid then remain with the insurer. In D&O, the effect is brutal. An application built on doctored accounts, and the policy falls for everyone, including the independent director who knew nothing of the fraud, just as the liability suits arrive. The clause is the U.S. market's answer: the insurer waives its right to rescind the contract. It comes in two tiers. The broadest form rules out any rescission and leaves the insurer only its exclusions, applied insured by insured through severability of the application. The common form limits the waiver to Side A, or to insureds who had no knowledge of the misstated facts; the company and the signatories of the application remain exposed. In the United Kingdom, the Insurance Act 2015 replaced automatic avoidance with proportionate remedies. Only a deliberate or reckless breach of the duty of fair presentation still lets the insurer avoid while keeping the premium: that is where the clause still matters. Under French law, the reach of an advance waiver of nullity is debated, since the Code treats its rules as mandatory. French market wordings therefore tend to combine severability with a clause imputing knowledge of the facts only to the signatories of the application.