Bad cases make bad law.
The Court of Appeal holds today that even if the insurance company doesn't ask, you're required sua sponte to tell them anything that might potentially influence their decision regarding whether or not to issue a policy. On that basis, it reverses the jury award in favor of the policyholder below.
Look, I know that everyone hates Michael Avenatti. For good reason. But the insurance company here didn't ask any questions at all about where the money came from to buy the airplane it insured. (Turns out, he embezzled those funds.) Moreover, the policyholder here isn't even Avenatti; it's a different, innocent person that ends up owning the plane, and hence losing $3 million-plus when the insurance company rescinds the policy based on the failure to volunteer information that the insurance company didn't even bother to request.
This just seems like a terrible decision for pretty much every insurance coverage case other than this one. There are legions of facts that might potentially influence an insurance company's decision. I understand that the insurance code requires me to be honest, with full disclosure. But that only applies to things that the insurance company asks. If my health insurance company doesn't feel like asking about my medical history, I don't have to tell them. If my life insurance company doesn't ask about whether I'm occasionally depressed, I don't have to tell them. If my auto insurance company doesn't ask about whether I sometimes exceed the speed limit on the highway, I don't have to tell them.
Until today.
