Bill Text: CA AB459 | 2015-2016 | Regular Session | Amended

California Assembly Bill 459 (Prior Session Legislation)

Bill Title: Insurance: insurable interest: declaratory relief.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2016-11-30 - Died on Senate inactive file. [AB459 Detail]

Download: California-2015-AB459-Amended.html

BILL NUMBER: AB 459	AMENDED
	BILL TEXT

	AMENDED IN SENATE  AUGUST 2, 2016
	AMENDED IN SENATE  JULY 6, 2015

INTRODUCED BY   Assembly Member Daly

                        FEBRUARY 23, 2015

   An act to add and repeal Section 10110.15 of the Insurance Code,
relating to insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 459, as amended, 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.
   Existing law, effective January 1, 2010, provides that any device,
scheme, or artifice designed to give the appearance of an insurable
interest when there is no insurable interest, violates the insurable
interest laws.
   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 an insurable interest, to bring an action, on or
before January 1,  2017,   2018,  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. The bill would also prohibit an owner of record  or
the insurer  from commencing an action against the named insured
 or a relative of the insured  of the policy seeking
damages or any other remedy if a court enters a judgment in an action
brought pursuant to these provisions declaring a life insurance
policy  invalid   void  on the basis that
the policy was issued to a person who lacked an insurable interest.
These provisions would remain in effect only until January 1,
 2017,   2018,  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 1.  Section 10110.15 is added to the Insurance Code, to
read:
   10110.15.  (a) On or before January 1,  2017, 
 2018,  the 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, may bring an action for declaratory
relief seeking a court order declaring the policy to have a valid
insurable interest.
   (b) The right of the owner of record of a life insurance policy to
bring an action for declaratory relief under this section applies
only to policies issued for delivery in California prior to January
1, 2010,  and  that have a death benefit equal to or
greater than one million dollars ($1,000,000). Only the owner of
record of a life insurance policy on the effective date of this
section may bring a declaratory judgment action under this section.
   (c) Nothing in this section shall be construed as limiting an
insurer's existing right to seek declaratory or other relief
regarding the validity of a life insurance policy.
   (d) If a court enters a judgment in an action brought pursuant to
this section that declares a life insurance policy  invalid
  void  on the basis that the policy was issued to
a person who lacked an insurable interest, the owner of record 
or the insurer  shall not commence any action against the named
insured  or a relative of the insured  of that life
insurance policy seeking damages or any other remedy resulting from
the  invalidity of the policy.   policy being
declared void. 
   (e) For purposes of this section, a policy is issued for delivery
in the state of residence of the policy's owner of record on the date
of issue.
   (f) For purposes of this section, "owner of record" means the
owner of a life insurance policy as recorded on the books and records
of the insurer that issued or assumed the policy.
   (g) This section shall remain in effect only until January 1,
 2017,   2018,  and as of that date is
repealed.