SB 648 Relating to Insurable Interests/Insurance Contracts Submitted to Governor: May 19

CS/1st Eng. Senate Bill 648: Relating to Insurable Interests/Insurance Contracts by the Senate Judiciary Committee and Senator Bill Posey was submitted to Governor Charlie Crist today, May 19, 2008.

CS/1st Eng. SB 648 provides for the requirement of an insurable interest in an insured at the time of an insurance contract; provides for actions by the insured to recover benefits under such a contract paid to a person lacking such an interest at the time such contract was executed; and requires consent of the person insured for certain contracts, etc.

The Governor has until June 3, 2008, to sign the bill, veto the bill, or allow it to become law without his signature.

A summary of SB 648 is below:

CS/SB 648 Insurable Interests/ Insurance Contracts

SB 648 was passed by the Senate on April 3, 2008, by a vote of 39 Yeas, 0 Nays. In the House, the bill passed as amended on April 18, 2008, 112 Yeas, 0 Nays. It was then prepared for presentation to the Governor.

Overview

This bill amends Section 627.404, Florida Statutes (“F.S.”), relating to insurable interests and is expressly intended to clarify current Florida law relating to insurable interests as follows:

• provides for the requirement of an insurable interest in an insured must exist at the time of an insurance contract;

• provides that a person may purchase insurance on his or her life or body for payment to any beneficiary; however a person must have an insurable interest to purchase insurance in the life of the insured at the time the contract is entered;

• provides various circumstances that constitute an insurable interest;

• provides for actions by the insured to recover benefits under a contract paid to a person lacking an insurable interest at the time the insurance contract was executed; and

• provides for the consent of the insured for certain insurance contracts.

Section 1

Amends Section 627.404 F.S. to define “Insurable Interests” to include the following:

• the insured;

• a person closely related to the insured by blood or law;

• a person who has a substantial pecuniary interest in the continued life health and safety of the insured;

• a person who is party to a contract for purchase or sale of any business entity for the purposes of that contract only;

• a trust, or the trustee of a trust if the policy is owned by the trust or the trustee under specific circumstances;

• a guardian, trustee or other fiduciary;

• an IRS 501(c)(3) charitable organization, if the insured consents in writing to the charity’s ownership or purchase of the policy;

• a trustee, sponsor or custodian of any asset held in any ERISA retirement benefit plan, with the written consent of the prospective insured; however the employer, trustee, sponsor or custodian may not retaliate if the participant does not consent to the issuance of insurance; or

• a business entity with regard to its owners, directors, officers, partners and managers or the business itself, any affiliate or subsidiary if consent is obtained in writing from the insured prior to purchase; however the business may not retaliate if the participant does not consent to the issuance of insurance.

• If the insurance proceeds are paid to a beneficiary, assignee or other payee that did not have an insurable interest at the time the contract was made, then the insured or any lawfully acting agent may maintain an action to recover benefits from the person receiving them;

• The insured must have the capacity to contract and consent in writing to the contract and its terms, unless the insured is a minor.

Section 2

• Provides that amendments to Section 627.404 F.S. are intended to clarify existing law.

Section 3

• The effective date is July 1, 2008.

Should you have any questions or comments, please do not hesitate to contact this office.

 

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