Opinion ID: 1187797
Heading Depth: 3
Heading Rank: 2

Heading: Is There a Genuine Fact Issue about Whether Tammy Raymer Had an Insurable Interest in the Truck?

Text: State Farm argues that the superior court erred in finding as a matter of law that Tammy had an insurable interest in the truck. State Farm asserts that there is no evidence that Tammy had a legal or equitable interest in the truck. It argues that the truck was the separate property of Michael and that there is no evidence that Michael and Tammy intended to make the truck marital property. Tammy argues that although she was not on the truck's title, she had an insurable interest in the truck because she suffered loss when the truck was destroyed. She also argues that State Farm is estopped from raising the insurable interest defense, and that State Farm waived this defense by not raising it in its answer. Alaska Statute 21.42.030(a) provides: A contract of insurance of property ... may not be enforced as to the insurance except for the benefit of persons having an insurable interest in the things insured at the time of the loss. The statute defines insurable interest as an actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment. [5] Applying this statutory definition, the superior court concluded that Tammy had an insurable interest in the truck: The Court finds no authority which states that the co-insured's name must appear on the title of the property. Furthermore, there is no dispute that Tammy Raymer would suffer financially if a loss were not covered by the insurance policy. Therefore, Tammy Raymer has an insurable interest in the pickup, even though her name was not on the title. We first note that if it were marital property, [6] Tammy would unquestionably have an insurable interest in the truck. [7] But we conclude that there is a genuine fact issue about whether the truck was marital property. Michael purchased the truck in Colorado in September 1993, before he and Tammy married. He insured the truck through the United Services Automobile Association (USAA). Michael and Tammy married on February 11, 1994. Michael dropped his USAA insurance coverage and Michael and Tammy purchased insurance for the truck from State Farm, effective February 12, 1994; State Farm had been Tammy's insurance company for several years. Michael did not add Tammy to the truck's title. Tammy and Michael point to other evidence that supports their argument that they intended the truck to be marital property. State Farm relies heavily on the fact that Michael did not add Tammy to the title of the truck even though Tammy added Michael to the title of her Chrysler LeBaron in December 1993. State Farm argues that this shows that the Raymers did not intend to make the truck marital property. Property acquired by one spouse prior to marriage is the separate property of that spouse. [8] Separate property can become marital property where that is the intent of the owner and there is an act or acts which demonstrate that intent. [9] Although there is ample evidence, including the joint insurance policy, that Michael and Tammy intended to treat the truck as marital property, the fact that they changed the title of the car and not the truck raises a genuine fact issue about whether they intended the truck to become marital property. It is also unclear from the record whether Michael made payments on the truck with marital funds before the fire. Although Tammy argues that she also paid for the truck, the only supporting evidence she offered was a check used to pay off the truck loan several days after the Raymers sued State Farm. Notwithstanding these fact disputes, we conclude that Tammy had a sufficient beneficial interest in the truck to give her an insurable interest, even though she was not a legal owner of the truck. [T]itle is not the sole test for determining an insurable interest. It may be a special or limited interest, disconnected from any title, lien or possession, whereby the holder of the interest will suffer loss by its destruction, etc., and that will entitle him to protect the interest by insurance. [10] We agree with the Utah Supreme Court that insurable interest is a fairly broad concept and can encompass contingent and beneficial interests: Generally speaking, a person has an insurable interest in property whenever he would profit by or gain some advantage by its continued existence and suffer some loss or disadvantage by its destruction. If he would sustain such loss, it is immaterial whether he has, or has not, any title in or lien upon, or possession of, the property itself. . . . Any interest in property, legal or equitable, qualified, conditional, contingent, or absolute, or merely the right to use the property, with or without the payment of rent, is sufficient. [11] Other courts, in determining whether an insurable interest exists, have also considered whether a party has an equitable or contingent interest. [12] In Overton v. Progressive Insurance Co., [13] which is most directly on point and on which Tammy heavily relies, the wife alone had an insurance policy on the husband's car, which the husband intentionally burned. Relying on a Florida statute similar to AS 21.41.030, the court found that the wife had an insurable interest in the car: As a general principle, a wife who has a pecuniary or beneficial interest in her husband's property, or would have some disadvantage from its loss, has an insurable interest therein. The fact that appellant did not own the insured vehicle does not preclude her an insurable interest and coverage under the policy. [14] The court did not analyze the basis of the beneficial interest, suggesting that the mere fact that the wife was the owner's spouse was enough. [15] The court remanded the case for a determination of the extent of the wife's insurable interest. [16] Both parties cite Error v. Western Home Insurance Co. [17] The Utah Supreme Court there held that a husband who was not on the title of the house still had an insurable interest: Julie's ownership of the property gave Ray an insurable interest since the property's continued existence could possibly provide him with a more advantageous divorce settlement. At the very least, upon his second marriage to Julie, Ray gained an equitable interest in the property sufficient to constitute an insurable interest. [18] But the court went on to conclude that because no evidence was offered concerning the value of that interest, the lower court did not err in valuing Ray's interest as zero. [19] Both cases support a conclusion that Tammy had an insurable interest in the truck as Michael's spouse. Even if the truck was Michael's separate property, it may be that its replacement would have to be purchased with joint or marital assets. We also agree with the reasoning of the Error court and hold that even if the truck was exclusively Michael's, it was an asset which, in the event of divorce, a court might invade in order to divide the couple's property equitably. This interest was sufficient for us to conclude that Tammy had an insurable interest satisfying AS 21.42.030. Concluding that Tammy had an insurable interest in Michael's truck, albeit an equitable and contingent interest, does not conflict with the public policies behind the insurable interest doctrine. Statutes requiring an insurable interest were enacted to prevent insurance contracts from being used as a means of wagering, to prevent societal waste by discouraging unproductive contracts, and to reduce the incentive for the destruction of property to obtain insurance proceeds. [20] The superior court determined that Tammy was an innocent co-insured. There is no evidence that these public policies are implicated in this case. Notwithstanding the genuine fact issue about whether the truck was marital property, we conclude that, at a minimum, Tammy's status as Michael's wife gave her an insurable interest in the truck. Because we so decide, there is no reason to address Tammy's estoppel and waiver arguments.