California & False Swearing
The Californian Court of Appeal, in Watts v. Farmers Insurance Exchange, 98 Cal. App.4th 1246, 120 Cal. Rptr.2d 694 (2002) broke new ground in the defense of fraudulent insurance claims. The Court of Appeal resolved, to the benefit of insurers, the issue of whether a fraud or false swearing defense to an insurance claim can be established without proof that the insurer relied on the misrepresentation to its prejudice. However, by applying “public policy” it also decided that an innocent co-insured who holds property jointly with an insured that has committed fraud is not automatically excluded from coverage, even if the language of the policy preventing such recovery is clear and unambiguous.
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