REG INSURANCE 2008

1) legal interest (ie ownership, a contract to buy property, security interest, possession of property

2) possibility of pecuniary loss

1) fee simple - owner has an insurable interest for the property's value
2) secured creditor has an insurable interest in property for the amount of the loan balance outstanding
(an unsecured creditor has no insurable interest)
3) lessee has an insurable interest in property during rental period
-beneficiary has an insurable interest in trust property that they will receive
4) shareholder has insurable interest in property held by corporation to extent of % of investment
5) a buyer of goods has an insurable interest as soon as the goods exist and are identified to the K

-to prevent the insured from recovering in full on small losses when they haven't insured the property for its full value
-standard 80% clause - at least 80% of FMV at time of loss
-if coverage is smaller, the recovery is limited
*only applies if partial destruction
*if total destruction, then co-insurance clause doesn't apply

actual loss x amt of insurance / coinsurance 80 % x fmv at time of loss

smallest of 3 amounts
-amount of loss
-face value of policy
-limit based on coinsurance clause (result) -ignore co-insurance % if total loss

lower of three

-insured must have at least 500 x 80% = 400 to fully recover
-actual coverage is only 300
-insurance will only cover 300/400 = $150

insurable interest

-at time of loss
-doesn't have to exist when policy issued

-mortagee has insurable interest in mortgage balance owed
-partner in a partnership
-owner of a company who wants to buy life insurance on an officer critical to company

-NOT a general creditor

-insured can recover from insurance company
-the right of the insurer (insurance company is subrogated to X's claim against Y) to step into the shoes of the insured
-once the insurance co pays the insured, the insurance co "steps into the shoes" of X and has the same rights against Y (who caused the damage)
-insurance companies can recover from 3rd parties based on this right
-accident, fire, auto collision

1) partial loss - 180 in damage
180 x 150 (insurance #1)
---------------------------
80% x 250 fmv time of loss
2) totally destroyed = co-insurance clause does not apply
*the insured will be able to recover the full face value of the insurance policy