HB 375

1	A bill to be entitled
2	An act relating to insurable interests; amending s.
3	627.404, F.S.; providing definitions; providing for the
4	requirement of an insurable interest in an insured at the
5	time of an insurance contract; providing for actions by
6	the insured to recover benefits under such a contract paid
7	to a person lacking such an interest at the time such
8	contract was executed; requiring the consent of the person
9	insured for certain contracts; providing exceptions;
10	providing applicability; providing intent; providing an
11	effective date.
12
13	Be It Enacted by the Legislature of the State of Florida:
14
15	Section 1.  Section 627.404, Florida Statutes, is amended
16	to read:
17	627.404  Insurable interest; personal insurance.--
18	(1)  Any individual of legal capacity may procure or effect
19	an insurance contract on his or her own life or body for the
20	benefit of any person, but no person shall procure or cause to
21	be procured or effected an insurance contract on the life or
22	body of another individual unless the benefits under such
23	contract are payable to the individual insured or his or her
24	personal representatives, or to any person having, at the time
25	such contract was made, an insurable interest in the individual
26	insured. The insurable interest need not exist after the
27	inception date of coverage under the contract.
28	(2)  For purposes of this section, the term:
29	(a)  "Business entity" includes, but is not limited to, a
30	joint venture, partnership, corporation, limited liability
31	company, and business trust.
32	(b)  "Insurable interest" as to life, health, or disability
33	insurance, includes only the following interests:
34	1.  An individual has an insurable interest in his or her
35	own life, body, and health.
36	2.  An individual has an insurable interest in the life,
37	body, and health of another person to whom the individual is
38	closely related by blood or by law and in whom the individual
39	has a substantial interest engendered by love and affection.
40	3.  An individual has an insurable interest in the life,
41	body, and health of another person if such individual has an
42	expectation of a substantial pecuniary advantage through the
43	continued life, health, and safety of that other person and
44	consequent substantial pecuniary loss by reason of the death,
45	injury, or disability of that other person.
46	4.  An individual party to a contract for the purchase or
47	sale of an interest in any business entity has an insurable
48	interest in the life of each other party to such contract for
49	the purpose of such contract only.
50	5.  A trust, or the trustee of a trust, has an insurable
51	interest in the life of an individual insured under a life
52	insurance policy owned by the trust, or the trustee of the trust
53	acting in a fiduciary capacity, if the insured is the grantor of
54	the trust; an individual closely related by blood or law to the
55	grantor; or an individual in whom the grantor otherwise has an
56	insurable interest, and the life insurance proceeds are
57	primarily for the benefit of trust beneficiaries having an
58	insurable interest in the life of the insured.
59	6.  A guardian, trustee, or other fiduciary, acting in a
60	fiduciary capacity, has an insurable interest in the life of any
61	person for whose benefit the fiduciary holds property, and in
62	the life of any other individual in whose life such person has
63	an insurable interest.
64	7.  A charitable organization meeting the requirements of
65	s. 501(c)(3) of the Internal Revenue Code of 1986, as amended,
66	has an insurable interest in the life of any person who consents
67	in writing to the organization's ownership or purchase of that
68	insurance.
69	8.  A trustee or custodian of assets held in any plan
70	governed by the Employee Retirement Income Security Act of 1974,
71	29 U.S.C. ss. 1001 et seq., or in any other retirement or
72	employee benefit plan, has an insurable interest in the life of
73	any participant in the plan with the written consent of the
74	prospective insured. An employer, trustee, or custodian may not
75	retaliate or take adverse action against any participant who
76	does not consent to the issuance of insurance on the
77	participant's life.
78	9.  A business entity has an insurable interest in the
79	life, body, or health of any of the owners, directors, officers,
80	partners, and managers of the business entity or any subsidiary
81	of the business entity, and in key employees of the business
82	entity or key persons whose services and qualifications are such
83	that the death, injury, or disability of the key employee or key
84	person would cause the business entity or its subsidiary to
85	incur a substantial pecuniary loss.
86	(3)(1)  An insurer shall be entitled to rely upon all
87	statements, declarations, and representations made by an
88	applicant for insurance relative to the insurable interest which
89	such applicant has in the insured; and no insurer shall incur
90	any legal liability except as set forth in the policy, by virtue
91	of any untrue statements, declarations, or representations so
92	relied upon in good faith by the insurer.
93	(4)  If the beneficiary, assignee, or other payee under any
94	insurance contract directly or indirectly procured by a person
95	not having an insurable interest in the insured at the time such
96	contract was made receives from the insurer any benefits
97	thereunder by reason of the death, injury, or disability of the
98	insured, the insured or his or her personal representative or
99	other lawfully acting agent may maintain an action to recover
100	such benefits from the person receiving them.
101	(5)  No contract of insurance upon a person, other than a
102	policy of group life insurance or group or blanket accident,
103	health, or disability insurance, shall be made unless, on or
104	before the time of the making of the contract, the person
105	insured, having legal capacity to contract, applies for or
106	consents in writing to the making of the contract, except in the
107	following cases:
108	(a)  A spouse may effectuate a policy of insurance upon the
109	other spouse.
110	(b)  Any person having an insurable interest in the life of
111	a minor or any person upon whom a minor is dependent for support
112	and maintenance may effectuate a policy of insurance on the
113	minor.
114	(c)  Family policies may be issued insuring any two or more
115	members of a family pursuant to an application signed by either
116	parent, a stepparent, or a husband or wife.
117	(6)  For purposes of this section, the signature of the
118	proposed insured, having capacity to contract, on the
119	application for insurance shall constitute his or her written
120	consent.
121	(7)  This section shall not apply to any policy of life
122	insurance to which s. 624.402(8) applies.
123	(2)  A charitable organization that meets the requirements
124	of s. 501(c)(3) of the Internal Revenue Code of 1986, as
125	amended, may own or purchase life insurance on an insured who
126	consents to the ownership or purchase of that insurance.
127	Section 2.  The amendments to s. 627.404, Florida Statutes,
128	made by this act are intended to clarify existing law.
129	Section 3.  This act shall take effect July 1, 2008.

CODING: Words stricken are deletions; words underlined are additions.