Opinion ID: 789143
Heading Depth: 2
Heading Rank: 4

Heading: Insurable Interest

Text: 36 Given that, in our view, ABM used and controlled property in the WTC and thereby acquired a BI claim, we next examine the district court's conclusion that even if ABM used or controlled the common areas and the premises of other tenants, its activities did not rise to the level necessary to create a legally cognizable `interest' in the property. Zurich, 265 F.Supp.2d at 306. In light of ABM's substantial influence over, and availment of, the WTC infrastructure to develop its business, it is difficult to imagine what would constitute a legally cognizable `interest' in the property, apart from ownership or tenancy. The terms of the insurance policy, however, do not limit coverage to property owned or leased by the insured. To the contrary, the policy's scope expressly includes real or personal property that the insured used, controlled, or intended for use. 37 The district court's imposition of the legally cognizable `interest' in the property requirement is an impermissible hurdle to insurance coverage, contemplated by neither the parties nor the New York legislature. The only prerequisite to coverage mandated by New York law is that an entity have an insurable interest in the property it insures. New York law embraces the sui generis nature of an insurable interest and statutorily defines this term to include any lawful and substantial economic interest in the safety or preservation of property from loss, destruction or pecuniary damage. N.Y. Ins. Law § 3401 (2002). ABM's income stream is dependent upon the common areas and leased premises in the WTC complex, and thus ABM meets New York's requirement of having an insurable interest in that property. 38 The prophylactic function of the insurable interest requirement is not destroyed by its breadth. Zurich asserts that extending ABM's insurable interest to include the common areas and leased premises would mean that ABM has direct damage coverage for these areas — an absurd result. To the contrary, ABM does not have and does not claim to have an insurable interest in these properties for the purpose of direct damage coverage because it suffered no direct pecuniary loss of asset value. The insurable interest requirement thus avoids absurd results by protecting only that in which ABM has a financial stake — its future stream of income. 39 Zurich further contends that ABM's interest is only derivative from the property, and that it does not constitute a direct interest in the property itself. In so arguing, Zurich unsuccessfully seeks to amend the text of N.Y. Ins. Law § 3401 by narrowing the definition of an insurable interest. The outer reaches of an interest that can be insured clearly encompass an indirect economic interest in the property. Such an interest can be insured if, as is the case here, it falls within the definitional boundaries set by the insurance policy.