§ 3.4 Insurable Interest - Vendor or Purchaser

• Library: Guide to South Carolina Liability and Property Insurance Law (SCBar) (2019 Ed.)

§ 3.4 Insurable Interest - Vendor or Purchaser

A vendor and vendee have separate and distinct interests in the same property that each may insure, "so long as either of them retains an interest in the property, whether the sale be conditioned or the contract executory."³² The South Carolina Supreme Court addressed this issue in Thomas v. Penn Mutual Fire Insurance Co.³³ On April 1, 1959, the parties entered into a contract entitled "Bond for Title" where the seller agreed to convey a tract of land, with improvements, to the purchasers for $6,500, with interest in monthly installments of $50. The purchasers made 21 payments as of February 10, 1962, and still owed $6,378.04. The seller previously had a policy of insurance that covered the property and after the policy cancelled, the seller told the purchasers they needed to purchase their own insurance, which the purchasers did on January 16, 1962. The policy was a "valued policy" and fixed the value of the covered interest as $4,000 and included a standard mortgagee clause in favor of the seller.³⁴

Despite his statement that he would not continue to insure the property and without the purchaser's knowledge, on January 20, 1962, the seller procured an insurance policy to cover his interest in the policy, and this policy was also a "value policy," which fixed the value of the interest as $5,000.³⁵ The house was totally destroyed by fire on February 23, 1962, and the insurers refused to pay the full value of the coverage.³⁶

In determining that the insurers were required to pay the loss, the Court explained:

Both [the seller] and the

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