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.
1989) (under Florida law, there is no fraud exception to incontestability clauses); see also Prudential Ins.
(9) The beneficiary moved for summary judgment, arguing the incontestability clause barred the insurer from raising any defense.
The court determined that, because of the difficulty of detecting the substitution of an imposter for the insured and "to prevent manifest injustice," beneficiaries of such policies should not be protected 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." (32) From this, the court concluded that "[i]f claims of potential fraud as to the fact of an insured's death--a fact most central to a life insurance contract--are subject to the statutory incontestability clause, Allstate's imposter claims cannot obviate [section] 627.455 based on their importance in the contractual scheme." (33)
In its petition for panel reconsideration, the insurer acknowledged the Florida Supreme Court has noted the incontestability clause "is in the nature of, and serves a similar purpose as, a statute of limitations...." (35) But the insurer argued that a statute of limitations simply serves to bar contract claims.
Fosaaen, Note, AIDS and the Incontestability Clause, 66 N.D.L.
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. 9 P.3d at 625-26.
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.L.R.