A current Tennessee Court docket of Appeals determination handled nuances of insurable curiosity in Tennessee regulation. 1 Whereas studying the courtroom’s evaluation, my first thought was readers ought to admire that the idea of insurable curiosity varies between states. Tennessee has a really broad idea of the time period and may be very liberal in its authorized method to the insurable curiosity requirement.
Jenifer Griffin bought a house in June 2010, financing it by a mortgage from Hope Federal Credit score Union, secured by a deed of belief. Nonetheless, Griffin defaulted on her mortgage, main Hope Federal Credit score Union to provoke foreclosures proceedings in 2018. In an try to stave off foreclosures, Griffin filed for Chapter 13 chapter in August 2018. Her chapter petition listed her private property at minimal values, claiming family items price solely $900, clothes at $150, and jewellery at $20. She denied proudly owning any electronics, collectibles, or sports activities and passion tools.
Regardless of the chapter submitting, Hope proceeded with foreclosures, and Griffin was ordered to vacate the property by March 2019. Nonetheless, she didn’t adjust to this order. Hope foreclosed on the property pursuant to the deed of belief and initiated a wrongful detainer motion in opposition to Griffin. In the course of the pendency of this motion, a fireplace occurred on the property in Could 2019. Subsequently, Griffin submitted a sworn assertion in proof of loss to Allstate, reporting an “precise money worth” of her private property at $1,000,000. She additionally supplied contents stock sheets detailing the objects broken or destroyed within the hearth, together with their unique prices and ages.
Griffin then amended her authorized filings to incorporate a third-party grievance in opposition to Allstate, alleging breach of contract and unhealthy religion refusal to pay extra dwelling bills and contents protection pursuant to her insurance coverage coverage. Allstate responded by submitting for abstract judgment, arguing that Griffin was not entitled to extra dwelling bills as a result of she didn’t have an insurable curiosity within the property on the time of the fireplace. In addition they argued that her contents protection declare needs to be dismissed as a result of judicial estoppel, citing inconsistencies between her chapter filings and her insurance coverage declare, which they contended constituted materials misrepresentations.
The trial courtroom granted Allstate’s movement for abstract judgment, discovering that Griffin lacked an insurable curiosity within the property and that judicial estoppel utilized to her contents declare. Griffin appealed this determination, elevating a number of points for overview.
The appellate courtroom’s evaluation centered on the idea of insurable curiosity, which is key to the validity of an insurance coverage contract. In Tennessee, an insurable curiosity exists if the insured stands to realize a bonus from the property’s continued existence or suffers a loss from its injury or destruction, no matter whether or not they maintain any title or lien on the property. The courtroom famous that Tennessee regulation has lengthy upheld this precept, recognizing that an insurable curiosity doesn’t require absolute possession however can exist primarily based on the potential for financial loss or acquire.
Griffin argued that regardless of the foreclosures, she maintained an insurable curiosity within the property as a result of her continued possession and the financial loss she would endure from the fireplace injury. The courtroom examined Tennessee case precedents the place insurable curiosity was acknowledged even within the absence of clear possession or title. For example, the courtroom discovered that an individual who resided in a property, even with out proudly owning it, had an insurable curiosity. Equally, the courtroom famous that Tennessee precedent discovered {that a} couple who deeded their dwelling to their son however continued to stay in it retained an insurable curiosity as a result of their potential financial loss from its destruction.
The appellate courtroom discovered that the trial courtroom erred in its dedication that Griffin lacked an insurable curiosity. By remaining in possession of the property and standing to endure a big financial loss from the fireplace, Griffin met the standards for having an insurable curiosity below Tennessee regulation. The appellate courtroom emphasised that the destruction of the property disadvantaged Griffin of a spot to stay, thereby inflicting her financial hurt, which substantiated her insurable curiosity.
Ms. Griffin continued to reside on the dwelling on the time of the fireplace, though her continued possession of the property was being challenged within the wrongful detainer motion. Thus, by the house’s continued existence, she would ‘acquire a bonus,’ in persevering with to have a spot to reside (no less than till probably being eliminated by pending authorized motion). Consequently, by the house’s destruction, she would ‘endure a loss’ by instantly having to search out one other place to stay. In accordance with precedent, we discover this reality a adequate cause to conclude that Ms. Griffin had an insurable curiosity within the property. Subsequently, we conclude that the trial courtroom erred in granting abstract judgment to Allstate on the extra dwelling bills declare on the premise that Ms. Griffin didn’t have an insurable curiosity within the property. 2
Fifteen years in the past, I wrote about insurable curiosity in The Insurance coverage Guidelines–Insurable Curiosity and Tackle of the Threat:
The insurable curiosity requirement in property insurance coverage insurance policies has historic and sensible implications. Usually, an ‘insurable curiosity’ in property exists when an individual or entity derives some monetary profit or different private benefit by a property’s preservation, upkeep or existence, in order that if the property have been broken or destroyed, the individual or entity would endure a monetary loss.
Traditionally, there was a social concern that if property insurance coverage was offered, insureds would have an incentive to destroy the insured property. The aim of the insurable curiosity requirement helps partially allay this concern.
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The most typical query I area is whether or not you need to be the proprietor of property to have an insurable curiosity. The reply: NO. To have an insurable curiosity, one should solely endure financially if the property is broken or destroyed.
The reply to the title of this submit is “sure.” The caveat is that one at all times has to test on the relevant state regulation to make sure.
A warning about this concern is that simply because one has an insurable curiosity doesn’t imply that the policyholder is “an insured” below the coverage. I’ve famous this protection concern various occasions, together with in “How Does Divorce Have an effect on Your Property Insurance coverage Declare?”
I can admire that some readers reflecting on the info of this case are going to surprise how an individual in prior chapter proceedings and a present foreclosures might be claiming $1 million for a contents loss. That dialogue of “judicial estoppel,” the place a policyholder claims nearly nothing for chapter and a big quantity for a contents declare, is a subject for one more day.
Thought For The Day
Your web price to the world is normally decided by what stays after your unhealthy habits are subtracted out of your good ones.
—Warren Buffett
1 Hope Federal Credit score Union v. Griffin, No. W2023-00310-COA-R3-CV, 2024 WL 3159858 (Tenn. App. June 25, 2024).
2 Id., at 9.