Watts

Thiscase raised the issues of whether a fraud or false swearing defense to an insurance claim can be established without proof that the insurer relied on the misrepresentation to its prejudice and whether an innocent co-insured who holds property jointly with an insured who has committed fraud is automatically excluded from coverage. We hold that the false swearing defense can be raised in the absence of reliance, and that under the wording of the policy in question and the California standard form fire insurance policy, an innocent co-insured may recover for his or her percentage share of the losses despite the transgressions of the other insured. We, therefore, reverse the summary judgment granted by the trial court in part and affirm in part, and remand for further proceedings.

Appellants Bobby G. Watts and Mae Watts brought suit against their insurer, respondent Farmers Insurance Exchange, claiming that Farmers wrongfully failed to pay for damage to their home resulting from a 1998 fire. Farmers obtained summary judgment by establishing that Mrs. Watts violated the policy’s fraud provision by untruthfully answering questions posed by Farmers’ investigators concerning…