California Civil Jury Instructions (CACI) (2017)

2309. Termination of Insurance Policy for Fraudulent Claim

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2309.Termination of Insurance Policy for Fraudulent Claim
[Name of insurer] claims that [name of insured] [is not entitled to recover
under/is not entitled to benefits under] the insurance policy because [he/
she] made a false claim. To establish this claim, [name of insurer] must
prove all of the following:
1. That [name of insured] made a claim for insurance benefits under
a policy with [name of insurer];
2. That [name of insured] represented to [name of insurer] that
[insert allegedly false representation];
3. That [name of insured]’s representation was not true;
4. That [name of insured] knew that the representation was not
5. That [name of insured] intended that [name of insurer] rely on this
representation in [investigating/paying] [name of insured]’s claim
for insurance benefits; and
6. That the representation that [insert allegedly false representation],
if true, would affect a reasonable insurance company’s
[investigation of/decision to pay] a claim for insurance benefits.
New September 2003
Directions for Use
If the insured’s misrepresentation or concealment in the insurance application is
raised as an affirmative defense by the insurer, this instruction may be modified for
use. The elements of the defense would be the same as stated above.
Sources and Authority
• Rescission of Contract. Civil Code section 1689(b)(1).
• Intentional Omission of Information Tending to Prove Falsity. Insurance Code
section 338.
• False Representation: Time for Rescission. Insurance Code section 359.
• “The materiality of a representation made in an application for a contract of
insurance is determined by a subjective standard (i.e., its effect on the particular
insurer to whom it was made) and rescission will be allowed even though the
misrepresentation was the result of negligence or the product of innocence. On
the other hand, in order to void a policy based upon the insured’s violation of
the standard fraud and concealment clause . . ., the false statement must have
been knowingly and wilfully made with the intent (express or implied) of
deceiving the insurer. The materiality of the statement will be determined by the
objective standard of its effect upon a reasonable insurer.” (Cummings v. Fire
Insurance Exchange (1988) 202 Cal.App.3d 1407, 1415, fn.7 [249 Cal.Rptr.
568], original italics, internal citation omitted.)
• “The consequence of rescission is not only the termination of further liability,
but also the restoration of the parties to their former positions by requiring each
to return whatever consideration has been received. . . . [T]his would require
the refund by [the insurer] of any premiums and the repayment by the
[insureds] of any proceed advance which they may have received.” (Imperial
Casualty & Indemnity Co. v. Sogomonian (1988) 198 Cal.App.3d 169, 184 [243
Cal.Rptr. 639], internal citation omitted.)
Secondary Sources
Croskey et al., California Practice Guide: Insurance Litigation (The Rutter Group)
¶¶ 5:143–5:146, 5:153–5:159.1, 5:160, 5:249–5:260.5, 15:241–15:256
2 California Liability Insurance Practice: Claims & Litigation (Cont.Ed.Bar)
Rescission and Reformation, §§ 21.2–21.4, 21.35–21.37
2 California Insurance Law & Practice, Ch. 8, The Insurance Contract, § 8.10[1]
(Matthew Bender)
26 California Forms of Pleading and Practice, Ch. 308, Insurance (Matthew
12 California Points and Authorities, Ch. 120, Insurance, §§ 120.250–120.251
(Matthew Bender)
2310–2319. Reserved for Future Use