Court Opinion

ID: 7827308
Source: CourtListenerOpinion
Date Created: 2022-09-07 18:10:26.481481+00
Date Added: 2024-06-11T16:30:54.040248
License: Public Domain

Tom Glaze, Justice, concurring. St. Paul Reinsurance Co., Inc. argues the federal district court decision of Underwriters at Loyds, London v. Pike, 812 F. Supp. 146 (W.D. Ark. 1993), presents a situation identical to the one now before us, and our court should follow it. Here, as was the case in Pike, the insurer argues that the insured obtained two separate valued policies on the same property, and because the insurable interest is the same in both policies, the insured is able to receive a double recovery or “windfall,” which exceeds the total value of the insurable interest. St. Paul urges there is an inherent risk in overinsuring property, and further suggests that such added risk and possible double recovery can be removed if the insured’s recovery in these circumstances is limited to receiving a pro rata amount from each insurer. Cf. Underwriters at Lloyd’s, London v. Pike, 977 F.2d 1278 (8th Cir. 1992). The insured, Cheryl Irons, on the other hand, counters that she is in no way enriched by the receipt of monies to which she is entitled, and in paying premiums for the two valued policies, insurers St. Paul and Gold Star were being paid for the risk they underwrote. There is no dispute in the instant case that the premiums being paid by the insured, Cheryl Irons, for the two fire insurance policies in issue were based on the policies’ valued amounts, $105,000 (St. Paul) and $80,000 (Gold Star). There is no issue or question raised concerning the value of Irons’s property;1 nor is there any suggestion that fraud played a part in Irons’s loss or claim. At this point, it also seems fair to say that valued policies, such as the ones held by Irons, are issued primarily to avoid potential disputes regarding the value of covered losses. Because Arkansas’ valued-policy statute authorizes a liquidated demand against the insurer who takes the risk for the full amount stated in the policy, I agree with the majority opinion that the statute requires full payment under both St. Paul’s and Gold Star’s policies. See 12 Lee R. Russ, Couch on Insurance § 175:106 (3d ed. 1995) (“[u]nder a ‘valued-policy law’ which is meant to fix the measure of damages in case of loss, the aggregate amount of insurance written is conclusive as to the value of the property and if there are multiple insurers, each is hable to the full amount of the policy”). If an insurer is concerned that an insured’s recovery under two or more policies could lead to abuses where double recovery might result, nothing precludes an insurer from asking the applicant seeking fire insurance whether the insured has (or intends to obtain) other insurance coverage on the same insurable risk. Cf. Pike, 977 F.2d at 1279. Moreover, when such insurance is renewed, it is a simple matter to again inquire of the insured if he or she has obtained (or intends to obtain) other insurance. Obviously, if the insured answers yes, the insurer can then decide if it still wishes to underwrite the insured’s property risk. If an insured answers no, but later is shown to have acquired a second policy, the insurer can deny coverage and payment because of the insured’s misrepresentation. In short, I fail to see the potential abuses foreseen by the federal district court in Pike and now forecast by the insurer St. Paul. As far as the interplay between the valued-policy law and a pro rata clause in a fire policy, the stated valuation in the policy controls in the absence of a showing of fraud, misrepresentation, collusion, mistake or criminal conduct on the insured’s part. See Tedford v. Security State Farm Ins. Co., 224 Ark. 1047, 278 S.W.2d 89 (1955); see also 12 Lee R. Russ, Couch on Insurance § 175:106 (3d ed. 1995) (“an exception to the valued-policy law applies, and the insurers are entitled to prorate payment under the policies’ ‘other insurance’ clauses, where the policies have been purchased from separate companies and the existence of such purchase was not disclosed to the insurers issuing such policies”). In any event, the remedy St. Paul now seeks from this court is clearly not one that may be extended and can only be authorized by the General Assembly. Id. at 1050-1051.   The record reflects an appraisal letter indicating the total loss amounted to $92,983.29.