AB 459, as introduced, Daly. Insurance: insurable interest: declaratory relief.
Existing law provides that an insurable interest, with reference to life and disability insurance, is an interest based upon a reasonable expectation of pecuniary advantage through the continued life, health, or bodily safety of another person and consequent loss by reason of that person’s death or disability or a substantial interest engendered by love and affection in the case of individuals closely related by blood or law. An individual has an unlimited insurable interest in his or her own life, health, and bodily safety and may lawfully take out a policy of insurance on his or her own life, health, or bodily safety and have the policy made payable to whomsoever he or she pleases, regardless of whether the beneficiary designated has an insurable interest.
This bill would authorize an owner of record of a life insurance policy, who believes in good faith that the insurer may challenge the policy for lack of insurable interest, to bring an action for declaratory relief seeking a court order declaring the policy to have a valid insurable interest. The bill would limit the applicability of these provisions to policies issued for delivery in California prior to January 1, 2010, that have a death benefit equal to or greater than $1,000,000, and when the owner of record was the owner of record on the effective date of these provisions. These provisions would remain in effect only until January 1, 2017, and would then be repealed.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 10110.15 is added to the Insurance Code,
2to read:
(a) The owner of record of a life insurance policy,
4who believes in good faith that the insurer may challenge the policy
5for lack of insurable interest, may bring an action for declaratory
6relief seeking a court order declaring the policy to have a valid
7insurable interest.
8(b) The right of the owner of record of a life insurance policy
9to bring an action for declaratory relief under this section applies
10only to policies issued for delivery in California prior to January
111, 2010, and that have a death benefit equal to or greater than one
12million dollars ($1,000,000). Only the owner of record of a life
13insurance policy on the effective date of this section may bring a
14declaratory judgment action under this section.
15(c) Nothing in this section shall be construed as limiting an
16insurer’s existing right to seek declaratory or other relief regarding
17the validity of a life insurance policy.
18(d) For purposes of this section, a policy is issued for delivery
19in the state of residence of the policy’s owner of record on the date
20of issue.
21(e) For purposes of this section, “owner of record” means the
22owner of a life insurance policy as recorded on the books and
23records of the insurer that issued or assumed the policy.
24(f) This section shall remain in effect only until January 1, 2017,
25and as of that date is repealed, unless a later enacted statute, that
26is enacted before January 1, 2017, deletes or extends that date.
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