MARK WHITE 

Attorney General 

The Attorney General of Texas 

July 9, 1980 

Honorable Douglass Hubbard 

Executive Director 

The Admiral Nimitz Center 

Fredericksburg, Texas 78624 

Opinion No. NW-208 

Re: Whether a private foundation 

may purchase insurance covering a 

state facility 

Dear Mr. Hubbard: 

The Nimitz Steamboat Hotel in Fredericksburg is an historic building 

restored to its original appearance with funds donated by the Admiral 

Nimitz Foundation, a private, non-profit corporation. The structure is the 

property of the State of Texas and in its restored condition is a major unit of 

the Admiral Nimitz Center administered by the Fleet Admiral Chester W. 

Nimitz Memorial Naval Museum Commission. See Acts 1969, 6ls.t Leg., ch. 8 

at 19; Attorney General Opinion H-744 (1975). The restoration was 

accomplished with donated money after the legislature failed to appropriate 

funds for that purpose. 

You wish to know if the private foundation may legally purchase fire 

insurance covering the hotel. The answer depends on whether its interest 

therein is insurable. A fire insurance policy issued to one without an 

insurable interest in the subject matter is unenforceable on grounds of public 

policy. See Hartford Fire Insurance Co. v. Evans, 255 S.W. 487 (Tex. Civ. 

App. - Azhlo 1923, no writ). 

It is not always necessary to prove title in an insured in order to prove 

an insurable interest in the property. In Smith v. Eagle Star Insurance Co., 

370 S.W. 2d 448 (Tex. 1963), the Texas Supreme Court concluded that an 

insurable interest in a house located on state land existed in a woman who 

used the house as though it were her own. The court approved the rule that 

an insurable interest exists when the assured derives pecuniary benefit or 

advantage by the preservation and continued existence of the property or 

would sustain pecuniary lass from its destruction, and it quoted a textual 

source for the following: 

‘An irrrurable interest in property does not 

necessarily imply a property interest in, or a lien 

upon, or possession of, the stiject matter of the 

insurance, and neither the title nor a beneficial 

interest is requisite to the existence of such an 

interest; it is sufficient that the insured is so situated 

with reference to the property that he would be liable 

to lass should it be injured or destroyed by the peril 

against which it is insured.’ 

P. 669 
Honorable Douglass Hubbard - Page Two (MN-268) 

See 43 Am. Jur. 2d, Insurance 5466 at 508. In Texas, a finding of pecuniary loss is not 

necessary to show an insurable interest if there is proof of a pecuniary benefit or 

advantage in the preservation and continued existence of the property. First Preferred 

Ins. Co. v. Bell, 587 S.W. 798 (Tex. Civ. App. - Amarillo 1979, writ rePd n.r.e.l. 

We conclude that an insurable interest in the hotel exists in the foundation. The 

articles of incorporation for the corporation state: 

The foundation shall have as its principal... objective the 

support of the Fleet Admiral Chester W. Nimitz Memorial 

Naval Museum in Fredericksburg, an agency of the State of 

Texas operating under the Fleet Admiral Chester W. Nimitz 

Memorial Naval Museum Commission. 

To accomplish these objectives the corporation will . . . 

assist in restoring and maintaining the famous Nimitz Hotel as a 

part of the museum and visitor center. . . . 

The corporation has invested a considerable sum in the hotel, routing its 

donations through the state treasury. The sums donated are earmarked by the 

foundation &nor for particular expenditures, for which purchase vouchers payable to 

the appropriate vendors are then issued by the comptroller. 

Should the hotel or its contents be damaged or destroyed, the corporation would 

not only lose the benefit of its previous investments, but in order to accomplish its 

corporate purposes would be faced with the task of restoring the building and articles 

destroyed or damaged, whether they l-ad been previously purchased with money 

donated by it or not. 

It is our opinion that under such circumstances the Admiral Nimitz Foundation 

may legally purchase fire insurance covering the Nimitz Steamboat Hotel and its 

contents. 

SUMMARY 

The Admiral Nimitz Foundation has an insurable interest in 

the Nimitz Steambcat Hotel in Fredericksburg, a state-owned 

structure, and may legally purchase fire insurance covering the 

hotel and its contents. 

A-l 

MARK WHITE 

Attorney General of Texas 

P. 670 
Honorable Douglass Hubbard - Page Three (MW-208) 

JOHN W. FAINTER, JR. 

First Assistant Attorney General 

TED L. HARTLEY 

Executive Assistant Attorney General 

Prepared by Bruce Youngblood 

Assistant ~Attorney General 

APPROVED: 

OPINION COMMFTEE 

C. Robert Heath, Chairman 

Carla Cox 

Susan Garrison 

Rick Gilpin 

Bruce Youngblood 

p. 671