Fort Worth life insurance lawyers need to read the 1983 case Gloria Cartusciello v. Allied Life Insurance Company of Texas. The case is from the Houston Court of Appeals [1st Dist.].
The facts are simple and virtually undisputed. Michael Cartusciello obtained a credit life insurance policy from the Allied after executing an application on March 7, 1978, which stated in pertinent parts as follows:
I hereby certify that I am in good health and gainfully employed and that my age is as stated above,… I certify that I have read and that the information provided hereinbefore to the best of my knowledge is true and I understand that any false statement, inaccuracy, or misrepresentation material to the risk, may be used by Allied Life Insurance Company of Texas to contest a claim. I have not been attended by a physician or been a patient in a hospital within the last 12 months preceding the date of this Application for any of the following impairments: Diseases of the (1) heart, (2) lungs or respiratory system, (3) stomach or digestive system, (4) brain or nervous system, or (5) cancer to any part of the body, except as follows:
The policy was issued on March 7 and the insured died on March 8 from coronary thrombosis. Lymphatic leukemia was listed as the secondary cause of death. Allied refused to pay the $53, 078.28 which Cartusciello claimed to be due under the policy. Cartusciello sued for the proceeds and Allied filed an answer and cross-action denying liability under the policy for three reasons: First, a valid contract never issued because the insured breached the warranties contained in the insurance policy; second, there could be no recovery by Cartusciello because the conditions precedent to the issuance of a valid policy were never met by the decedent; and third, there was a misrepresentation by the decedent as to his state of health. Allied then filed a motion for summary judgment urging the above three grounds as its basis for a take nothing judgment. The trial court granted the motion. This Court reversed.
In recent cases involving “good health provisions” the courts have required that the policy clearly state that the certificate of insurance is not binding unless the good health statement is true. The Texas Supreme Court has found that an insurance policy did not contain a good health provision because the effectiveness of the policy was under its terms, not dependent on the actual health of the insured, but rather on the truthfulness of the representations in the application at the time of delivery.
In essence, since the law disfavors warranties which cause forfeiture, the Texas courts follow the modern trend of construing policies to prevent forfeitures.
Allied argued strongly that the policy provides that no insurance policy will be in effect for any person who made a material misrepresentation concerning his or her past or present health condition. Allied submits that this language shows that the parties agreed that the policy would not be binding unless the good health statement was literally true. However, the court must construe the entire policy when determining whether a good health clause is a warranty or a representation. In other provisions of the policy, Allied refers to “misrepresentation” twice. These references to misrepresentations rather than warranties are enough for the court to find that the parties intended the statements to be representations.
Moreover, the policy states that any misrepresentations material to the risk “may” be used to contest a claim. This language does not imply that the policy will definitely stand or fall on the literal good health of the applicant as required.
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