THIS IS EXCERPT ONE FROM A LECTURE ON INSURANCE COMPANY BAD FAITH GIVEN BY ATTORNEY SCOTT MARKS
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The Los Angeles personal injury lawyers of The Marks Law Firm Specialize in Representing Those Experiencing Insurance Company Bad Faith Problems. Mr. Marks has achieved superior results in serious personal injury cases and is a particularly effective insurance bad faith attorney. The Firm has assists residents throughout Southern California including Los Angeles, West Los Angeles, Encino, Woodland Hills, Sherman Oaks, Tarzana, Santa Monica, Reseda
There are a number of key decisions and an Insurance Code statute which govern this specialized area of law and can be of great assistance to the policyholder. This covers key decision #2 of Mr. Mark’s lecture:
2. Disclosures of Material Conditions to an Insurance Agent, Which Due to the Negligence or Mistake of the Agent, Fails to be Included in the Application
Estops the Carrier from Rescinding the Policy
As explained by our Supreme Court over 70 years ago:
From an examination of the cases the following propositions may be regarded as established by the weight of authority: Where the insured, in good faith, makes truthful answers to the questions contained in the application, but his answers, owing to the fraud, mistake, or negligence of the agent filling out the application, are incorrectly transcribed, the company is estopped to assert their falsity as a defense to the policy. The acts of the agent, whether he is a general agent with power to issue policies, a soliciting agent, or merely medical examiner for the company, are in this respect the acts of the company, and he cannot be regarded as the agent of the insured, though it is so stipulated in the application or policy.' (Citation Omitted).
Accord: Byrd v. Mutual Benefit Health & Acc. Ass'n (1946) 73 Cal.App.2d 457, 463: "Where the insured, in good faith, makes truthful answers to the questions, but his answers, owing to the fraud, mistake or negligence of the agent filling out the application, are incorrectly transcribed, the company is estopped to assert their falsity as a defense to the [email protected]; Rutherford v. Prudential Ins. Co. (1965) 234 Cal.App.2d 719, 726 [same]; Boggio v. California Western States Life Ins. Co., (1966) 108 Cal.App.2d 588, 598 [same].
The estoppel rule applies even when the applicant receives a copy of his or her application, when some action by the agent leads the applicant to believe the misstated or omitted answers were immaterial. Rutherford v. Prudential Ins. Co. (1965) 234 Cal.App.2d 719, 726.
In Rutherford, the applicant mentioned preexisting health conditions to the physician hired by insurance company to conduct a medical examination. The physician led the insured to believe such information was not essential and that further written responses to the health questionnaire was unnecessary. The insurer could not rely on a misrepresentation defense.
This estoppel rule applies even where there is an express limitation of the authority of the agent to bind the company. Byrd v. Mutual Benefit H. & A. Assn. (1946) 73 Cal.App.2d 457, 463. This is true as knowledge of insurance company’s agent, obtained while acting within the scope of his authority, is imputed to the insurer as a matter of law. Beach vs. United States Fidelity & Guaranty Company (1962) 205 Cal. App. 409.
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