Following that decision, the California Legislature amended the state's statute requiring incontestability clauses to provide,
Incontestability clauses were designed to 1) encourage insurers to investigate facts promptly; 2) protect insureds' reasonable expectations of recovery; 3) prevent insurers from relying on minor misstatements to void policies; and 4) preclude life insurers from making charges against deceased individuals who are unable to rebut them.
9) The beneficiary moved for summary judgment, arguing the incontestability clause barred the insurer from raising any defense.
11) The court nevertheless determined the defense of an alleged impersonation of the insured by another at the physical examination was not barred by the incontestability clause.
Moreover, it observed that the incontestability clause is designed to promote stability by creating a reasonable expectation by the insured that a claim on a valid policy will be paid: Under an imposter situation, the beneficiary had no such reasonable expectation of payment.
The court stated that Porcaro "recognized that were a jury to determine that the insured lived for two years from the date the policy issued, the statutory incontestability clause would bar any defense of fraud based on the circumstances of the insured's disappearance.
2 requires all disability policies sold in the state to contain either Form A or Form B of the incontestability clause.
Vestal's policy with Revere contained an incontestability clause providing that "[n]o claim for Disability beginning after two years from the Date of Issue will be reduced or denied because of a disease or physical condition that existed before the Date of Issue unless it is excluded by name or specific description.
Vestal and Revere settled in 1998, but Deonier and Revere continued to litigate, with Deonier alleging that Revere breached its duties to Deonier as agent in contesting the Vestal claim without having told Deonier that it would dispute such claims notwithstanding the incontestability clause of the policy.
Deonier also engaged in considerable review of precedent regarding the incontestability clause.
I find that the protection of the incontestability clause does not extend to a wrongdoer who thwarts the investigation into the truth of his statements by posing as the independent verifier of the accuracy of the applicant's health.
1989); Annotation, Misrepresentation as to Employer-Employee Relationship as Within Incontestability Clause of Group Insurance, 26 A.