§ 3.7 Insurable Interest - Former Owners

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

§ 3.7 Insurable Interest - Former Owners

The federal district court addressed whether a former owner had an insurable interest in the property when he deeded the property to his father. While the son transferred ownership, he did not transfer the policy and did not inform the insurer about the change in ownership.⁵⁵ A portion of the building's roof collapsed and the son and father informed the insurer. The initial adjuster adjusted the claim as being covered under the policy and paid a third-party contractor to perform demolition and cleanup. However, a different adjuster was subsequently assigned and arranged for a title examination that revealed that the son had transferred the title before the claimed loss. Thereafter, the insurer denied the claim. The son and father brought suit against the insurer contending the policy afforded coverage.⁵⁶

The court determined the son retained an insurable interest in the building despite the transfer to the father. The court explained:

There is no doubt that after he transferred the deed to [the father], [the son] no longer held legal title to the building. However, lack of legal ownership does not end the insurable interest inquiry. Anyone who derives a benefit from property's existence or would suffer a loss from its destruction may have an insurable interest in that property. See Reid v. Hardware

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