(Code 1933, § 56-2503, enacted by Ga. L. 1960, p. 289, § 1; Ga. L. 1982, p. 650, § 2; Ga. L. 1983, p. 3, § 24.)
Law reviews.- For note, "Incontestability Clauses in Georgia Insurance Contracts," see 13 Ga. L. Rev. 850 (1979).
JUDICIAL DECISIONSThis section requires that policies be incontestable after two years; within that period, parties are free to agree to any lesser period. Smith v. New York Life Ins. Co., 579 F.2d 1267 (5th Cir. 1978).
Effect of incontestability clause.
- Under an incontestability clause, the insurer is, except as to certain conditions as to premiums, precluded from setting up any defense based upon misrepresentations or warranties made by the insured in the application, whether fraudulent or otherwise; and such a clause manifests the intention of the parties that all grounds of defense, save nonpayment of premium, shall be cut off by the clause. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).
After the period of incontestability has run, the insurer is only barred from contesting the validity of the policy itself, e.g., on grounds of fraud in the procurement, etc.; the insurer still reserves the right to deny any claim if the claim is not within the coverage as stated under the policy's terms, and this is true regardless of the import of any statements made in the application for insurance. Keaten v. Paul Revere Life Ins. Co., 648 F.2d 299 (5th Cir. 1981).
Georgia legislature and judiciary fully intend to treat the question of incontestability the same regardless of the type of policy issued. Keaten v. Paul Revere Life Ins. Co., 648 F.2d 299 (5th Cir. 1981).
Incontestability clause excludes operation of additional clause that in order for policy to take effect, the insured must have been in good health on its date, even though at that time the insured was in bad health and was afflicted with an incurable disease, from which the insured died after the time limit stated in the incontestability clause. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).
Limitation includes time which might ensue without contest.
- Limitation in an incontestability clause relates to the right of contest within a period of two years from the date of the policy, and does not exclude the time which might ensue without a contest subsequent to the death of the insured. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).
Contesting policy on ground of insured's having fatal disease upon issue.
- If an insured dies within two years of the date of the policy, proof of death is filed immediately, and the company in accordance with an exception to liability stated in the policy refuses to pay the claim on the ground that the insured was afflicted with a fatal disease on the date of the policy, such refusal to pay having been in ample time to allow action on the policy to be filed before the expiration of two years from the date of the policy, in action on policy after two years from the date of the policy, the insurance company, by virtue of the company's two-year incontestability clause, is not permitted to contest the policy on the ground that the insured was afflicted with a fatal disease on the date of the policy. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).
Mere refusal to pay claim does not constitute contest of liability.
- When the insured dies within the two-year period of contestability provided by an incontestability clause in a policy, a mere refusal within the two-year period to pay a claim, on the ground that the insurer is not liable because of another provision in the policy, will not suffice to serve as a contest of liability; such a mere refusal to pay, while manifesting the insurer's conception of the insurer's rights and the insurer's purpose to maintain those rights, does not constitute an attack upon the validity of the continued protection afforded by the contract of insurance, which requires some affirmative or defensive action in court. Riley v. Industrial Life & Health Ins. Co., 190 Ga. 891, 11 S.E.2d 20 (1940).
Contract becomes effective upon company's acceptance of premium and issuance of policy.
- When a receipt is given to an applicant for insurance by a local agent of a life insurance company for the first premium upon a policy of insurance, and the money is forwarded to the home office of the company and there accepted as the first payment upon the policy, and the policy is issued and forwarded to the local agent for delivery to the insured, the contract of insurance becomes effective upon the acceptance of the premium by the company and the issuance of the policy, notwithstanding that the policy may, according to the policy's terms, take effect at a later date. Interstate Life & Accident Ins. Co. v. McMahon, 50 Ga. App. 543, 179 S.E. 132 (1935).
Insurer is not barred by incontestability clauses from arguing that policies are void ab initio because the proposed insured, who was then an adult, neither signed the applications nor consented in writing to the issuance of the coverage as required by O.C.G.A. § 33-24-6(a). Guarantee Trust Life Ins. Co. v. Wood, 631 F. Supp. 15 (N.D. Ga. 1984).
Insurer not barred from seeking tort damages for fraud and deceit.- Incontestability clauses in policies do not bar the insurer, who has paid the proceeds of those policies to the beneficiary, from affirming the insurance contracts and seeking damages in tort for the fraud and deceit of the beneficiary with regard to representations made in the policy applications. Guarantee Trust Life Ins. Co. v. Wood, 631 F. Supp. 15 (N.D. Ga. 1984).
Grace period.
- In a case in which a life insurance policy lapsed for nonpayment of premiums before the insured died and the beneficiaries, relying on O.C.G.A. § 33-25-3(a)(1), asserted that the insured died during the contestability time period, the beneficiaries had no right to recover under the contract. The insurance company's letter to the insured did not indicate that the grace period was extended, only that the lapsed coverage could be reinstated, and O.C.G.A. § 33-25-3(a)(1) only required that a 30 day grace period be included in life insurance contracts, and there was no dispute that the contract at issue met that prerequisite. White v. New York Life Ins. Co., 564 F. Supp. 2d 1372 (S.D. Ga. 2008).
Cited in Gulf Life Ins. Co. v. Lanier, 114 Ga. App. 277, 151 S.E.2d 161 (1966); Robertson v. Southland Life Ins. Co., 130 Ga. App. 807, 204 S.E.2d 505 (1974); Liberty Nat'l Life Ins. Co. v. Davis, 146 Ga. App. 38, 245 S.E.2d 316 (1978); Phillips v. Old Republic Life Ins. Co., 155 Ga. App. 537, 271 S.E.2d 676 (1980); Goodley v. Fireman's Fund Am. Life Ins. Co., 173 Ga. App. 277, 326 S.E.2d 7 (1985).
RESEARCH REFERENCES
Am. Jur. 2d.
- 44 Am. Jur. 2d, Insurance, § 1046 et seq.
C.J.S.- 45 C.J.S., Insurance, § 1053.
ALR.
- Insurance: incontestable clause as excluding a defense based upon public policy, 13 A.L.R. 674; 35 A.L.R. 1491; 170 A.L.R. 1040.
Life insurance: forfeiture for nonpayment of premiums or assessments as affected by physical or mental disability, 15 A.L.R. 318.
Date from which life insurance premium periods are to be computed, 32 A.L.R. 1253; 80 A.L.R. 957; 111 A.L.R. 1420; 169 A.L.R. 290.
Requirement of "positive" proof of death of insured as excluding circumstantial evidence, 60 A.L.R. 592.
Misdescription of status, or relationship to insured, of beneficiary named in contract of life insurance or mutual life insurance, 60 A.L.R. 977.
Flat life insurance premium rate regardless of age, or failure to apply rate applicable according to age, as discrimination, 84 A.L.R. 525.
Time when incontestable clause in life insurance policy becomes effective; death of insured before end of contestable period, 85 A.L.R. 234; 105 A.L.R. 992.
Who are within term "heirs" in designation of beneficiaries of life insurance, 88 A.L.R. 624.
Dividends as applicable to extension of period of extended insurance, or to purchase of paid-up insurance, 92 A.L.R. 702.
Retroactive effect of statute prescribing terms or rights under life insurance policies, 106 A.L.R. 46.
Validity of provisions of life insurance policy which discriminates, as regards options allowed, between borrowing and nonborrowing insurants, 106 A.L.R. 1537.
Apportionment of divisible surplus of insurance company between different policies, 108 A.L.R. 1212.
Change in, renewal of, or substitution for original policy of life insurance as affecting time limitation prescribed by original policy in respect of defenses available to insurer, 110 A.L.R. 1139.
Who entitled to proceeds of life insurance under policy naming two or more beneficiaries, in event of death of one or more but less than all of them before insured, 112 A.L.R. 729.
Constitutionality, construction, and application of statutes relating to contractual time limitation provisions of insurance policies, 112 A.L.R. 1288.
Payment or tender, after lapse of policy for nonpayment of premium, of amount of loan on policy as affecting computation of paid-up or extended insurance, 114 A.L.R. 901.
Conclusiveness or controlling effect of table of surrender values contained in policy of insurance, 116 A.L.R. 793.
Delivery of policy of life insurance without payment of premium as waiver of condition that policy shall not be in force until payment of first premium, 118 A.L.R. 1072.
Statutory or contractual limitation where presumption of death of the insured from seven years' absence is relied upon, 119 A.L.R. 1308.
Incontestable clause of statute or policy as applicable to claims other than for death benefits, 121 A.L.R. 1437; 147 A.L.R. 1015.
Provision or option for payment in instalments of amount of life insurance policy as creating "annuity,", 128 A.L.R. 981.
Validity, construction, and application of automatic premium loan provision in life insurance policy, 129 A.L.R. 1105.
Age adjustment clause of policy as affected by incontestable clause or statute against avoidance of policy because of misrepresentation, 135 A.L.R. 445.
Provision in life insurance policy excluding or limiting liability if insured is not in sound health on date of delivery of policy as confined to change in condition after making or acceptance of application, 136 A.L.R. 1516; 60 A.L.R.2d 1429.
Insurer's failure to deduct future premiums from proceeds of loan as permitted or provided by policy or statute, as affecting subsequent lapse of policy for nonpayment of premium, 137 A.L.R. 836.
Effect of insurer's wrongful rejection of insured's claim under disability clause of life policy, 140 A.L.R. 781.
Compounding interest on a policy loan under a life insurance policy, 161 A.L.R. 433.
Excess payment and receipt of life insurance premiums as carrying additional insurance benefits, 161 A.L.R. 1000.
Date at which coverage begins upon reinstatement, renewal, or revival of insurance policy after default, 167 A.L.R. 333.
Right of insurer to restitution of payments made under mistake, 167 A.L.R. 470.
Admissibility against beneficiary of life or accident insurance policy of statements of third persons included in or with proof of death, 1 A.L.R.2d 365.
Incontestable clause as applicable to suit to reform insurance policy, 7 A.L.R.2d 504.
Form and sufficiency of proof of death in case of insured's disappearance, 26 A.L.R.2d 1073.
Right of life insurance beneficiary against estate of insured who used policy as collateral, 91 A.L.R.2d 496.
Insured's exercise of election afforded under life insurance policy as affected by his death before complete consummation of option, 15 A.L.R.3d 1317.
Beneficiary's ignorance of existence of life or accident policy as excusing failure to give notice, make proofs of loss, or bring action within time limited by policy or statute, 28 A.L.R.3d 292.
Construction and effect of "visible sign of injury" and similar clauses in accident provision of insurance policy, 28 A.L.R.3d 413.
Liability under life or accident policy not containing a "violation of the law" clause, for death or injury resulting from violation of law by insured, 43 A.L.R.3d 1120.