BILL NUMBER: SB 1273	CHAPTERED  09/24/04

	CHAPTER  730
	FILED WITH SECRETARY OF STATE  SEPTEMBER 24, 2004
	APPROVED BY GOVERNOR  SEPTEMBER 24, 2004
	PASSED THE SENATE  AUGUST 17, 2004
	PASSED THE ASSEMBLY  AUGUST 12, 2004
	AMENDED IN ASSEMBLY  JUNE 16, 2004
	AMENDED IN SENATE  APRIL 16, 2004
	AMENDED IN SENATE  MARCH 23, 2004

INTRODUCED BY   Senator Scott

                        FEBRUARY 13, 2004

   An act to amend  Sections 780, 781, and 782 of the Insurance Code,
relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1273, Scott.  Insurance:  misrepresentations.
   Existing law prohibits an insurer or his or her agent from
issuing, circulating, or using any misrepresentation of the terms of
a policy issued by the insurer or sought to be negotiated by the
person making or permitting the misrepresentation, or from making any
misrepresentation to another person for the purpose of inducing that
other person to take out a policy of insurance or to induce that
other person to lapse, forfeit, or surrender insurance in a policy he
or she holds.
   Existing law provides that  a violation of these provisions is a
crime, punishable by a fine not exceeding $1,500, or imprisonment in
a county jail for a period not exceeding 6 months.
   This bill would, instead, prohibit the above actions with respect
to any statement that is known, or should have been known, to be a
misrepresentation. Because this bill would change the definition of a
crime, it would impose a state-mandated local program.
   This bill would provide that a violation of these provisions is
punishable by a fine of up to $25,000, or if the loss of the victim
exceeds $10,000, by a fine of up to 3 times that loss, by
imprisonment in a county jail for a period of up to one year, or by
both that fine and imprisonment.
  The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 780 of the Insurance Code is amended to read:
   780.  An insurer or officer or agent thereof, or an insurance
broker or solicitor shall not cause or permit to be issued,
circulated or used, any statement that is known, or should have been
known, to be a misrepresentation of the following:
   (a) The terms of a policy issued by the insurer or sought to be
negotiated by the person making or permitting the misrepresentation.

   (b) The benefits or privileges promised thereunder.
   (c) The future dividends payable thereunder.
  SEC. 2.  Section 781 of the Insurance Code is amended to read:
   781.  (a) A person shall not make any statement that is known, or
should have been known, to be a misrepresentation (1) to any other
person for the purpose of inducing, or tending to induce, such other
person either to take out a policy of insurance, or to refuse to
accept a policy issued upon an application therefor and instead take
out any policy in another insurer, or (2) to a policyholder in any
insurer for the purpose of inducing or tending to induce him or her
to lapse, forfeit or surrender his or her insurance therein.
   (b) A person shall not make any representation or comparison of
insurers or policies to an insured which is misleading, for the
purpose of inducing or tending to induce him or her to lapse,
forfeit, change or surrender his or her insurance, whether on a
temporary or permanent plan.
  SEC. 3.  Section 782 of the Insurance Code is amended to read:
   782.  Any person who violates the provisions of Section 780 or 781
is punishable by a fine not exceeding twenty-five thousand dollars
($25,000), or in a case in which the loss of the victim exceeds ten
thousand dollars ($10,000), by a fine not exceeding three times the
amount of the loss suffered by the victim, by imprisonment in a
county jail for a period not to exceed one year, or by both a fine
and imprisonment.  Restitution to the victim ordered pursuant to
Section 1202.4 of the Penal Code shall be satisfied before any fine
imposed by this section is collected.
  SEC. 4.  No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.