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 isthe property ofthe State ofTexas and inits restored condition isamajor unit of the Admiral Nimitz Center administered by the Fleet Admiral Chester W. Nimitz Memorial Naval Museum Commission. See Acts 1969,6ls.tLeg., 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 inthe subject matter isunenforceable ongrounds ofpublic policy. See Hartford Fire Insurance Co. v. Evans, 255S.W.487 (Tex. Civ. App.- Azhlo 1923,no writ). It is not always necessary to prove title inan insured inorder to prove an insurable interest in the property. InSmith v.Eagle Star Insurance Co., 370 S.W. 2d448 (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 asthough 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 issufficient that the insured issosituated with reference to the property that he would beliable to lass should it be injured or destroyed by the peril against which it isinsured.’

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See 43Am. Jur. 2d,Insurance 5466at 508. InTexas, afinding ofpecuniary loss isnot necessary to show an insurable interest if there is proof of a pecuniary benefit or advantage inthe preservation and continued existence ofthe property. First Preferred Ins. Co. v.Bell, 587S.W.798(Tex. Civ. App.- Amarillo 1979,writ rePd n.r.e.l. Weconclude that an insurable interest in the hotel exists inthe foundation. The articles ofincorporation 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 inrestoring and maintaining the famous Nimitz Hotel asa part ofthe museum andvisitor 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 bythe 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 ofrestoring the building and articles destroyed or damaged, whether they l-ad been previously purchased with money donated byit ornot. 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 ofTexas

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JOHN W.FAINTER, JR. First Assistant Attorney General TEDL.HARTLEY Executive Assistant Attorney General Prepared byBruce Youngblood Assistant ~Attorney General APPROVED: OPINION COMMFTEE C.Robert Heath, Chairman Carla Cox Susan Garrison Rick Gilpin Bruce Youngblood

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