Voidable Contract

What Does Voidable Contract Mean?

A voidable contract, in the context of insurance, is a valid insurance contract that can be rendered void. Unlike a void contract, it holds the same legal effect and force as a valid contract.

Insuranceopedia Explains Voidable Contract

Insurance contracts are often voidable to protect the insurer. Insurance companies may void a policy if the insured fails to pay premiums, becomes a higher risk, or is found to have misrepresented information on their application. Similarly, a policyholder may stop paying premiums, thus failing to meet the terms of the contract and rendering it void. Other factors that could make a contract voidable include:

• Non-disclosure of one or more material facts
• Misrepresentation or fraud
• Mutual mistake
• Lack of free will by a contracting party or undue influence
• One party’s legal incapacity to enter into a contract