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Today, as you know, we are looking at the insurable interest doctrine and at the related issue of the insurer’s liability for having issued life insurance policies that motivate the murder of the insured. One case we did not take a close look at is Life Ins. Co. of Georgia v. Lopez, 443 So. 2d 947 (Fla. 1983). There, the plaintiff alleged not that the insurer should have known about a lack of insurable interest or should have known about the beneficiary’s homicidal intentions towards the insured, but that the insurer DID know and did nothing about it. The Florida Supreme Court shocked few, I imagine, when it held that allegations to this effect stated a claim for relief.

What is perhaps surprising is that there was a dissent. 

“The majority opinion, in holding that the insurer had a duty to investigate, places a tremendous burden on life insurers. They will now be required to launch investigations upon receipt of unsubstantiated reports from their insureds and perhaps also from disinterested and even anonymous persons. Such investigations, by their very nature, pose a danger to insurance companies in that they may become subject to accusations of invasion of privacy and slander. Moreover, if the investigation turns up inaccurate information, the insurer may be led to wrongfully cancel a policy that should be kept in force.”

While ordinarily I am sympathetic to burden arguments and bundling up contracts with all sorts of judge-created ancillary duties, here I think I would prefer ex ante that my life insurer assume such a burden and charge me an appropriate premium for the service. I’d be willing to waive my privacy rights (such as they are) ex ante if someone phoned in and said my wife was plotting to kill me. On the other hand, if I really thought a beneficiary were trying to kill me, I might not wait for the insurance company to agree with me following its investigation. I’d name a new beneficiary or cancel the policy and so advise my prospective assassin. No?


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