After issuing a health policy, an insurer discovers that the policyholder made an unintentional, immaterial error in the application. Under the market reforms codified in Virginia's Title 38.2, may the insurer rescind the policy?

Why B is correct

The market reforms codified in Title 38.2 of the Code of Virginia (Va. Code § 38.2-3431 et seq.) incorporate the Affordable Care Act rule that coverage may not be rescinded unless the individual performed an act or practice of fraud or made an intentional misrepresentation of a material fact. An unintentional, immaterial mistake gives the insurer no rescission right, and a retroactive premium increase is not a permitted substitute. The Virginia Bureau of Insurance enforces these reform standards.

Why the other options are wrong

• A) The reforms bar rescission for innocent or immaterial errors; only fraud or intentional material misrepresentation opens the door.
• C) The timing of a claim is irrelevant; the ground for rescission must be fraud or intentional material misrepresentation, not merely who acted first.
• D) Retroactive premium increases are a form of post-claim underwriting and are not a permitted response to an application error.

Memory hook

Unintentional mistake, no rescission — fraud is the only door.