California Civil Jury Instructions (CACI)

2302. Breach of Contract for Temporary Life Insurance - Essential Factual Elements

[Name of plaintiff] claims that [name of defendant] breached an agreement to pay life insurance benefits. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of defendant] or its authorized agent received [name of decedent]’s application for life insurance;

2. That [name of decedent] paid the first insurance premium;

3. That [name of decedent] died [on/after/before] [insert relevant date]; and

4. The amount of the insurance benefits 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 case.

This instruction is intended for an alleged breach of a contract of temporary life 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.

Sources and Authority

  • Insurance Code section 10115 provides, in pertinent part: “When a payment is made equal to the full first premium at the time an application for life insurance . . . is signed by the applicant and . . . the insurer . . . approves the application . . . and the person to be insured dies . . . before such policy is issued and delivered, the insurer shall pay such amount as would have been due under the terms of the policy in the same manner and subject to the same rights, conditions and defenses as if such policy had been issued and delivered on the date the application was signed by the applicant. The provisions of this section shall not prohibit an insurer from limiting the maximum amount . . . if a statement to this effect is included in the application.”
  • “We are of the view that a contract of insurance arose upon defendant’s receipt of the completed application and the first premium payment… The understanding of an ordinary person is the standard [that] must be used in construing the contract, and such a person upon reading the application would believe that he would secure the benefit of immediate coverage by paying the premium in advance of delivery of the policy.” (Ransom v. The Penn Mutual Life Insurance Co. (1954) 43 Cal.2d 420, 425 [274 P.2d 633].)
  • “[A]n insurance company is not precluded from imposing conditions precedent to the effectiveness of insurance coverage despite the advance payment of the first premium. However, . . . any such condition must be stated in conspicuous, unambiguous and unequivocal language which an ordinary layman can understand.” (Thompson v. Occidental Life Insurance Co. of California (1973) 9 Cal.3d 904, 912 [109 Cal.Rptr. 473, 513 P.2d 353].)
  • Temporary life insurance coverage “is not terminated until the applicant receives from the insurer both a notice of the rejection of his application and a refund of his premium.” (Smith v. Westland Life Insurance Co. (1975) 15 Cal.3d 111, 120 [123 Cal.Rptr. 649, 539 P.2d 433].)
  • “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] [automobile insurance].)

Secondary Sources

2 Witkin, Summary of California Law (10th ed. 2005) Insurance, §§ 37—39

Croskey et al., California Practice Guide: Insurance Litigation (The Rutter Group) ΒΆΒΆ 2:134—2:137, 6:428—6:448

2 California Insurance Law & Practice, Ch. 9, Issuance of Insurance Policies, § 9.07 (Matthew Bender)

26 California Forms of Pleading and Practice, Ch. 308, Insurance (Matthew Bender)

12 California Points and Authorities, Ch. 120, Insurance, §§ 120.19—120.20 (Matthew Bender)