Gilbert v. Allstate Ins. Co.
(2nd Dept., decided 5/15/2012)
This is a bit of back fill. But important back fill.
You insure one person but find out after a fire that destroyed the insured dwelling that another person, who is not listed or named on the policy, is listed as a co-owner on the property's deed. There's no mortgagee. Do you:
a. pay 100% of the dwelling loss to just your named insured?
b. pay 100% of the dwelling loss to both your named insured and the other co-owner? -or-
c. pay 50% of the dwelling loss to just your named insured?
If you were Allstate, you do c., pay 50% of the dwelling loss to just your named insured. And in the recent opinion of the Second Department, Appellate Division, you would be correct in doing so.
The plaintiff owned property as a tenant in common with a business partner, who was not a party to this action. In 1996 the plaintiff procured a policy of fire insurance on the property from Allstate solely in his own name. On October 2, 2009, the premises were destroyed by a fire. Allstate paid the plaintiff one-half of the value of the property on the ground that the plaintiff had only a one-half insurable interest in the property. The plaintiff, arguing that a tenant-in-common has an undivided right to the full use, enjoyment, and possession of the entire property (and therefore had a 100% insurable interest in that property), brought this action to recover the full value of the destroyed premises. The Supreme Court, Orange County (Slobod, J.), denied the plaintiff's motion for summary judgment on the issue of liability and granted Allstate's cross motion for summary judgment dismissing the complaint.
In AFFIRMING the grant of summary judgment to Allstate, the Appellate Division, Second Department, succinctly reasoned:
Insurance Law § 3401 limits a contract or policy of insurance to the insured's "insurable interest." When two cotenants own real property which is damaged by a fire and insurance is procured in the name of only one contenant, recovery under the policy is limited to the insured cotenant's one-half interest in the real property (see Graziane v National Sur. Corp., 120 AD2d 773, 775 ; Krupp v Aetna Life & Cas. Co., 103 AD2d 252 ).