Opinion ID: 2623341
Heading Depth: 1
Heading Rank: 4

Heading: the insurable interest of a cotenant in possession may exceed the quantum of his (or her) fractional legal estate in the cotenancy property where the insuring cotenant acts as the managing agent for the joint owners [34]

Text: ¶ 13 Defendant invokes the oft-repeated statement that a cotenant's insurable interest is limited to his (or her) interest in the property. [35] While we agree with this as a general proposition, we note that it is an abstraction that begs the question of what qualifies as an interest. Defendant argues that the intent of the general proposition is to limit a cotenant's interest to the quantum of his (or her) legal title. We grant that under some circumstances a cotenant's insurable interest may properly be so limited, but we regard Oklahoma's factual expectation approach to insurable interest as authorizing under proper circumstances recovery by a cotenant of more than the cotenant's fractional interest in the insured property. ¶ 14 Tenancy in common is a joint interest in property. [36] Its only essential element is a unity of the right of possession. [37] While each tenant in common has a separate and distinct title which is held independently of the other cotenants, [38] each stands to the other in a relation of mutual trust and confidence. [39] One tenant in common may not act or claim in derogation of [40] the interest of the other joint owners. [41] This means that a cotenant is not allowed to lessen or diminish the value or effect of the other cotenant's right, title, interest or status in the land. [42] ¶ 15 While none of these attributes of cotenancy places an affirmative duty on one cotenant to insure the common property for the benefit of the other joint owners, cotenants clearly have a mutual and reciprocal interest in the safety and preservation of the common property. This is especially true where the cotenants are all family members and the common property is the residence of some or all of them. Each has a reciprocal expectation of economic advantage from the home's continuing existence and its availability as a residence for the others. When the residence is destroyed, the occupants lose more than their individual fractional legal interests in the property. Before the home's destruction, they all have a place to live. Afterwards, they are homeless and must go to the expense of securing another home. ¶ 16 In such a case it would not be unusual for one of the resident cotenants to be given the responsibility of maintaining and protecting the property for the benefit of the other co-owning family members. A cotenant who has assumed or who has been given such general managerial authority over the property is free to exercise that authority by taking any measure which a reasonably prudent person in that position would take to protect the property, including purchasing insurance for the benefit of all joint owners. [43] A tenant in common who manages family-owned property which serves as the residence of all or some of the family clearly has a substantial economic interest in the continued existence of the property both as an individual and as the representative of the family. ¶ 17 Whether Delk was in fact authorized by the other cotenants as their agent to secure fire coverage for the co-owned premises is a question of fact for resolution by the certifying court. [44] We would only note here that the realities of a cotenancy relationship in which the cotenants are all family members, some or all of whom occupy the premises as their home, suggest that something less than a formal agreement would suffice to establish the requisite agreement or understanding. [45] ¶ 18 The provisions of 36 O.S.2001 § 3605.C. state, The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment thereof. The statutory formulation is simply another way of saying that the insured may recover the amount which will indemnify him (or her) for the loss suffered. Indemnification is measured by the extent to which the insured has been economically impacted by the happening of the insured event. Assuming the existence of the requisite agency relationship between plaintiff and her co-owners, anything less than a recovery in the amount of the value of the property (up to the policy limits) will not constitute full indemnity for the loss. ¶ 19 It might be objected that allowing a fractional interest holder to recover the full value of the fee interests under an insurance contract implicates the public policy concerns underlying the insurable interest requirement. In response we would underscore that the insuring cotenant acts as an agent for the other co-owners in acquiring insurance on the premises and any recovery is held in trust by the insuring cotenant for the benefit of the other joint owners. An agent is a fiduciary with respect to any matter in the scope of the agency relationship. [46] An agent receiving money belonging to the principal holds the money in trust for the principal's benefit. [47] Should the insuring cotenant fail to account to the other joint owners for their share of the proceeds, an action to impress the funds with a constructive trust would be available. [48] The insuring cotenant can have no motivation for wagering on the property's loss and cannot profit by its destruction where the insurer is required to pay the coverage limits, but each cotenant is legally entitled to only his share of the proceeds. [49] ¶ 20 The ordinary person purchasing insurance cannot be expected to understand a term of art such as insurable interest in a policy of insurance. All the insured knows is that he (or she) has paid money to secure protection for the insured property and in case it is destroyed the insurer will cover the loss. The policy of insurance in this case states that it covers your [the insured's] dwelling. On the eleventh page of the policy, fifth among a list of fifteen conditions is the insurable interest limitation. The insurer never asked the insured about her legal interest in the insured property. The policy limits and the premium paid by this insured clearly demonstrate her intent that more than her bare legal interest be insured. An insurer cannot lead an unsophisticated insured into believing that protection of the family home has been procured and then after the occurrence of the insured event deny full coverage. [50] ¶ 21 Finally, it is immaterial to the risk assumed by the insurer whether this plaintiff was acting as the agent of the joint owners or whether she was the property's sole owner. The insurer believed it was entering into a contract of indemnity for the full value of the home up to the coverage limits. Its obligations are not increased by the actual status of the legal title to the insured premises. The risk it assumed is the risk it incurred. [51]