Coral Gables, FL commercial litigation attorney Jeffrey Lapin talks about a memorable case in which he used the concept of “Insurable Interest” to help win for his client.
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This was an interesting care that we recently tried in federal court before a jury, and the case involved an insured of my client who had purchased a luxury RV that was valued in excess of $500,000.00, but he had bought it although it was nearly new, used under somewhat suspicious circumstances for less than half of that and had purchased a policy through my client that included coverage for actual cash value. Within 30 days of the purchase of the RV and it being insured by my client the FBI came and confiscated the RV from our insured claiming that it was a stolen RV.
Our insured turned around and sued my client for actual cash value, so something he had paid hundreds of thousand dollars less for he was now seeking to recover from my client for over $500,000.00. And there was something about that, that did not sit well with my client and they resisted paying, but they really weren’t sure of what sort of legal concept justified their concerns about hold on a second, here was somebody who bought this RV under very suspicious circumstances. We can’t prove that he was involved in the theft, but it sure looks opportunistic that he would pay this little and all of the sudden 30 days later have it confiscated and seek compensation under the policy.
We explored that and found the appropriate legal concept to implement, which is an old concept in insurance law called the Insurable Interest. Anybody who insures something has to have a sufficient interest in the object, the property being insured for it to be insurable as distinguished from a simple wagering contract. So here the question with respect to this RV that he had purchased is not only did he have an insurable interest in it, but what is the extent of that insurable interest? And it turns out there is some law that’s not very well developed in Florida that established that when you purchase a stolen item your interest is a possessory interest against everybody but the rightful owner.
And so what’s the measure of your damages for a possessor interest? It is loss of use. Well in this particular case, a trial, we were able to persuade the jury that this insured was seeking the full value of this piece of property, where in fact the most he should have been able to collect based on his interest was a possessory interest. He was in the best position to have identified that this RV was likely stolen. He took the risk when he bought it for less than its value that maybe he was getting a stolen vehicle. But they presented no evidence of loss of use, which would have been a very small portion of a recovery.
They wanted to go for the Full Monty, the full value of the RV, and I think the jury was persuaded by the fact that he was in the best position to identify that this was something he could have steered clear from and instead was looking to get a windfall from the insurance company and the jury awarded him zero damages in that case.