CACI No. 2301. Breach of Insurance Binder - Essential Factual Elements

Judicial Council of California Civil Jury Instructions (2023 edition)

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2301.Breach of Insurance Binder - Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] breached its duty to
pay [him/her/nonbinary pronoun/it] for a loss or liability covered under a
temporary insurance contract called an insurance binder. To establish
this claim, [name of plaintiff] must prove all of the following:
1. That [name of defendant] or its authorized agent agreed, orally or
in writing, to provide [name of plaintiff] with an insurance binder;
2. That [name of plaintiff] [paid/was obligated to pay] for the
insurance binder [or that payment was waived];
3. That [name of plaintiff] suffered a loss during the time the
insurance binder was in effect;
4. That [all or part of] the loss was covered under the [insurance
binder] [terms of the insurance policy [name of defendant] would
have issued to [name of plaintiff]];
5. That [name of defendant] was notified of the loss [as required by
the insurance binder]; and
6. The amount of the covered loss or liability that [name of
defendant] failed to pay.
New September 2003
Directions for Use
The instructions in this series assume the plaintiff is the insured and the defendant is
the insurer. The party designations may be changed if appropriate to the facts of the
This instruction is intended for an alleged breach of a contract of temporary
insurance coverage. The court must interpret as a matter of law whether an ordinary
person in the applicant’s circumstances would conclude, based on the language of
the application, that coverage began immediately. Do not use this instruction unless
the court has decided this issue.
Use bracketed language in element 5 if the jury is required to resolve a factual
dispute over whether the manner in which the insurer received notice conformed to
the policy requirements for notice. Element 4 should be modified if there is an issue
regarding whether the insurance company’s agent made oral statements at variance
with the policy language.
Note that the statutory requirements for a “binder” under Insurance Code section
382.5 do not apply to life or disability insurance, for insurance of any kind in the
amount of $1 million or more, or to an oral binder (see Ins. Code, § 382.5(a)).
Sources and Authority
Binders. Insurance Code section 382.5.
Cancelation of Temporary Insurance. Insurance Code section 481.1.
“Under California law, a contract of temporary insurance may arise from
completion of an application for insurance and payment of the first premium if
the language of the application would lead an ordinary lay person to conclude
that coverage was immediate.” (Ahern v. Dillenback (1991) 1 Cal.App.4th 36, 47
[1 Cal.Rptr.2d 339].)
“[A] binder is an independent contract, separate and distinct from the permanent
insurance policy. It is intended to give temporary protection pending the
investigation of the risk by the insurer and until issuance of a formal policy or
rejection of the insurance application by the insurer.” (Ahern, supra, 1
Cal.App.4th at p. 48.)
“[P]racticality dictates that a temporary insurance binder issued upon an
application for insurance cannot contain all of the details and terms of the
proposed insurance contract. . . . [I]nsurance binders are adequate if they
indicate the subject matter, the coverage period, the rate and the amount of
insurance. (National Emblem Insurance Co. v. Rios (1969) 275 Cal.App.2d 70,
76 [79 Cal.Rptr. 583], internal citations omitted.)
“Whether or not a valid binder exists is a question of fact insofar as a finding
comprehends issues relating to the credibility of witnesses or the weight of the
evidence, but a question of law insofar as a finding embraces a conclusion that
such factual elements do not constitute a valid oral binder.” (Spott Electrical Co.
v. Industrial Indemnity Co. (1973) 30 Cal.App.3d 797, 805 [106 Cal.Rptr. 710],
internal citations omitted.)
‘For the sake of convenience, contracts of insurance sometimes exist in two
forms: (1) A preliminary contract intended to protect the applicant pending
investigation of the risk by the company or until the policy can be properly
issued. (2) The final contract or policy itself. . . . An agent possessing authority
to bind the company by contracts of insurance has authority to bind it by a
preliminary or temporary contract of insurance. . . .’ This preliminary contract is
sometimes called ‘cover note’ or ‘binder.’ . . . ‘A valid temporary or preliminary
contract of present insurance may be made orally, or it may be partly in parol
and partly in writing.’ (Parlier Fruit Co. v. Fireman’s Fund Insurance Co.
(1957) 151 Cal.App.2d 6, 19-20 [311 P.2d 62], internal quotation marks and
citation omitted.)
Secondary Sources
2 Witkin, Summary of California Law (11th ed. 2017) Insurance, §§ 54, 55
Croskey et al., California Practice Guide: Insurance Litigation, Ch. 2-D, When
Insurance Effective; Coverage of Losses Before Policy Issued, ¶¶ 2:101-2:137 (The
Rutter Group)
1 California Liability Insurance Practice: Claims & Litigation (Cont.Ed.Bar)
Determining Whether Enforceable Obligation Exists, §§ 5.17-5.20
2 California Insurance Law & Practice, Ch. 9, Issuance of Insurance Policies,
§ 9.06[1]-[7] (Matthew Bender)
26 California Forms of Pleading and Practice, Ch. 308, Insurance (Matthew Bender)
12 California Points and Authorities, Ch. 120, Insurance, § 120.15 (Matthew
11 California Legal Forms: Transaction Guide, Ch. 26A, Title Insurance, §§ 26A.15,
26A.220 (Matthew Bender)

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