Defendant insurer challenged a decision of the Superior Court of Los Angeles County (California), which entered judgment for plaintiff insured compelling the insurer to pay all disability income benefits due her under a disability insurance contract.
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Overview
The insured obtained disability insurance with the insurer while she lived in Washington State. She received benefits there and then moved to California where she again received benefits. The insurer then sought to rescind the policy alleging false statements made by the insured regarding her physical condition. The insurer argued that the laws of Washington or New York should be used to interpret the contract. On appeal, the court rejected this contention holding that performance of the terms of the contract was partly in New York and partly in Washington, and under such circumstances, the law of the place where the contract was made generally prevailed. However, the insurer waived the law of Washington as controlling by its continuous acceptance of premiums from California, its payment of disability benefits there, and its making of a loan to the insured secured by the policy while she continued to reside in California. The court held that based on California law, the insurer was barred from using the insured’s alleged false statements to defeat the policy given that the policy’s incontestability provision did not provide for an exception for false statements.
Outcome
The court affirmed the decision of the trial court to compel the insurer to pay all disability benefits due to the insured under a disability insurance contract and agreeing that California law controlled the interpretation of the contract.
