Rescission of a Life Insurance Policy
Misrepresenting the Use Of Drugs Makes Policy Void from its Inception
Post number 5299
Posted on March 9, 2026 by Barry Zalma
In Primerica Life Insurance Company v. Rosalia Castillo Bucio, an individual; Hipolito Castillo Bucio, an individual No. 3:24-cv-01567-RBM-KSC, United States District Court, S.D. California (March 2, 2026) Primerica Life Insurance Company sued Rosalia Castillo Bucio and Hipolito Castillo Bucio, seeking to rescind a term life insurance policy issued to Gilberto Castillo.
FACTUAL BACKGROUND
. The policy, valued at $614,000, named the defendants as co-beneficiaries. Castillo submitted an application on January 15, 2020, in which he denied any history of drug or alcohol abuse in the past ten years. However, after Castillo’s death on March 28, 2021, medical records revealed that he had used methamphetamine and cocaine prior to the application date, contradicting his representations. Both defendants subsequently filed claims for the death benefit, prompting Primerica to investigate during the contestability period.
LEGAL ISSUES
The complaint relied on the principle that insurance policies may be rescinded when material misrepresentations are made in the application. California law allows an insurer to void a policy if the insured provides false, incomplete, or incorrect information that is material to the risk assumed. The application included explicit provisions requiring truth and completeness, and stated coverage could be voided if such misrepresentations were discovered within two years of issuance.
DISCUSSION
The Court found that Castillo’s answers regarding drug use were materially false. The records showed methamphetamine use for two months and daily cocaine use for over a year before the application. These facts were not disclosed to Primerica, violating the terms of the application and the policy. Castillo never corrected or updated his statements. As both co-beneficiaries submitted claims, but the misrepresentation was discovered during the contestability period, Primerica was entitled to investigate and seek rescission.
ANALYSIS
Based on the uncontested evidence and the default of the defendants, the Court determined the misrepresentations were material and justified rescinding the policy. The motion for default judgment was granted as the defendants failed to appear or respond, and the facts supported Primerica’s claim. The Court’s decision reflects the importance of truthful disclosure in insurance applications and enforcement of contestability provisions to protect insurers from fraudulent claims.
Possibility of Prejudice to Plaintiff
If Plaintiff’s Motion is not granted, it will be denied a resolution of its claim that the Policy is rescinded based on Castillo’s material misrepresentations in his Application. Thus, the potential prejudice to Plaintiff supports granting Plaintiff’s Motion.
Based on the allegations of the Complaint, Castillo’s misrepresentations in his Application regarding his use of illegal drugs, i.e. that he had not used illegal drugs during the specified time period when he had were material because Plaintiff asked the questions, and also because Plaintiff would not have issued the Policy had it known Castillo was using illegal drugs. The fact that the insurer has demanded answers to specific questions in an application for insurance is in itself usually sufficient to establish materiality as a matter of law.
Plaintiff sufficiently alleges compliance with the procedural requirements for rescission because it gave notice and returned the premiums paid for the Policy rescission requires notice of the intent to rescind and return of the value received under the contract.
Generally, default judgments are disfavored, and a case should be decided on the merits whenever possible, but where a defendant’s failure to appear makes a decision on the merits impracticable, if not impossible, entry of default judgment is warranted. The Court found entry of default judgment is proper and granted Plaintiff’s Motion for Default Judgment. The Policy (No. 0491628046) is rescinded, void ab initio, and of no legal force or effect.
ZALMA OPINION
Some people do not understand that insurance is a business of the utmost good faith requiring each party to fairly, honestly and capably tell the truth when applying for insurance. When an potential insured answers falsely to a question in an application for life insurance that he did not use illegal drugs when, in fact, he used methamphetamine and cocaine prior to the application date. Fraud in the inception of a policy requires it to be rescinded.
(c) 2026 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://barryzalma.substack.com/subscribe
Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the InsuranceClaims Library – https://lnkd.in/gwEYk.
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Qui Tam Relators are not officers of the United States
Posted on September 4, 2026 by Barry Zalma
Attempt to use Constitution to Stop a Qui Tam False Claims Act Case
Post 5486
FCA’s Qui Tam Provisions do not Violate the Appointments Clause.
In United States Of America, Clarissa Zafirov, ex rel; Dr. v. Florida Medical Associates, LLC, d.b.a. Vipcare, Physician Partners, LLC, Anion Technologies, LLC, Freedom Health, Inc., Optimum Healthcare, Inc., Physician Partners Specialty Services, LLC, et al., No. 24-13581, United States Court of Appeals, Eleventh Circuit (September 1, 2026).
The False Claims Act (“FCA”) allows the Attorney General to bring civil suits against perpetrators of fraud against the government. This case involves another portion of the FCA-the qui tam provisions-which allow people, called relators, who have knowledge about fraud against the government to pursue a case against the perpetrator of the fraud.
Dr. Clarissa Zafirov filed a qui tam action under the False Claims Act on behalf of...
Posted on September 3, 2026 by Barry Zalma
You Only Get One Chance to Sue
Post 5484
In David Cromp v. Johnny Harkrider, Monique Harkrider, and their Marital Community, dba Able Plumbing Plus, No. 61678-5-II, Court of Appeals of Washington, Division 2 (August 25, 2026) David Cromp hired Able Plumbing Plus in 2018 to install plumbing, including two toilets, at his residence. In 2019, both toilets allegedly leaked, causing damage. Insurance claims were submitted through Able’s contractor policy, but the insurer eventually denied the claims.
Cromp sued Able in 2022 for breach of contract based on the allegedly defective toilet installation. During that case, Cromp attempted to add claims related to Able’s conduct during the insurance claim process, including fraud, bad faith, tortious conduct, and bond-related claims, but the superior court denied leave to amend. The 2022 breach-of-contract claim was later dismissed with prejudice on summary judgment as time-barred.
On the same day the 2022 case was dismissed, Cromp filed a ...
Habeas Corpus Petition Granted
Post 5483
Posted on September 2, 2026 by Barry Zalma
Over Staying Visa & Charge of Insurance Fraud Still Entitled to Habeas Relief and a Bond Hearing
In Hernan Guillermo Palomino-Crespo v. Warden, Glades County Detention Center et al., No. 2:26-cv-02322-SPC-NPM, United States District Court, M.D. Florida, Fort Myers Division (August 26, 2026) Hernan Guillermo Palomino-Crespo’s Amended Petition for Writ of Habeas Corpus, the government’s response and Palomino-Crespo’s reply.
FACTUAL BACKGROUND
Palomino-Crespo is a native and citizen of Colombia who lawfully entered the United States on a B-2 non-immigrant visa on February 24, 2017. He resides in Miami, Florida with his wife and two minor children, owns and operates a residential restoration and remodeling business, and files U.S. tax returns.
On June 4, 2026, the State of Florida charged Palomino-Crespo with insurance fraud.
Palomino-Crespo claimeds he did not meet the requirements for mandatory detention under § ...
