Everyone in the insurance industry has heard the term reformation, but it is often misunderstood. In California (and elsewhere), the legal right to reformation originated over a century ago when we still had separate courts of “law” and “equity.” Reformation was a creature of the latter, designed to prevent one party from using a mistake in a written agreement against the other.
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Hopefully this does not happen to you, but on occasion the policy applied for is not the policy you receive from the insurance company. In such a case, you may need to reform the policy. Reformation is appropriate when the contract does not represent the true agreement of the parties.1 It is an equitable remedy and within the trial court’s discretion whether to grant a motion for reformation.2 It is an appropriate form of relief for a mutual mistake.3

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In my previous post in this series, I introduced the basic principle of insurance policy reformation. In a nutshell, contract reformation happens with the former contract is rewritten in a manner that reflects the true intentions of the parties more accurately. There can also be a reformation of a policy when one party makes a mistake coupled with fraud. A basic example that encompasses a mutual mistake is when the wrong address is listed on a policy because of a typo or mistake. Obviously both parties wanted the address of the risk to be insured and correct but a typo on an address can make a giant difference when a claim happens. I have litigated a claim against a Florida based insurance company who used the type on the address to attempt to deny responsibility for an accidental house fire.


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Contracts I, first semester, first year of law school, teaches contract reformation. My professor, Cleveland Ferguson, III, lectured on this topic and I remember it well. This basic principle of contract law is tested on the multi-state bar examination but policyholders may not know of this common remedy for property insurance contract changes.


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