- California Supreme Court Holds That Consumers Legal Remedies Act Does Not Apply to Life Insurance
- May 20, 2009 | Authors: Mitchell C. Tilner; Robert H. Wright
- Law Firm: Horvitz & Levy LLP - Encino Office
In Fairbanks v. Superior Court, the California Supreme Court held unanimously that life insurance is not subject to the Consumers Legal Remedies Act. That Act prohibits certain unfair or deceptive acts and practices in a "transaction intended to result or which results in the sale or lease of goods or services to any consumer." The Supreme Court held that life insurance is not a "good" or "service" and thus not subject to the Act's remedies.
Plaintiffs argued that insurance is a service because an insurer may provide ancillary services in connection with the sale of insurance, such as advice to an insured in selecting a policy. Employing logic that extends beyond the insurance context, the Supreme Court rejected that argument. It explained that "ancillary services are provided by the sellers of virtually all intangible goods - investment securities, bank deposit accounts and loans, and so forth. The sellers of virtually all these intangible items assist prospective customers in selecting products that suit their needs, and they often provide additional customer services related to the maintenance, value, use, redemption, resale, or repayment of the intangible item. Using the existence of these ancillary services to bring intangible goods within the coverage of the Consumers Legal Remedies Act would defeat the apparent legislative intent in limiting the definition of 'goods' to include only 'tangible chattels.'"