Court Opinion

ID: 9565538
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:23:23.129972+00
Date Added: 2024-06-11T09:19:44.194330
License: Public Domain

Justice PLEICONES.
I respectfully dissent and would affirm. In my opinion, under the facts of this case, the loss-payable clause does not provide American Credit with a right to recover from Nationwide the amount retained by the defaulting insured after she received payment from a third-party’s liability carrier.4
*631It has been held that an insured’s misconduct bars recovery by the lienholder under a loss-payable clause. Nationwide Mut. Ins. Co. v. Hunt, 327 S.C. 89, 93, 488 S.E.2d 339, 341 (1997). Furthermore, the loss-payable clause merely identifies the person who may collect the proceeds, and the lienholder stands in the insured’s shoes and is usually subject to the same defenses. Id.
In Nationwide’s policy with its insured in this case, the loss-payable clause specifically states, “This clause applies to the Comprehensive and Collision coverages provided by this policy.” Because, under the facts of this case, Nationwide’s coverage was never triggered, the loss-payable clause is simply not involved. Again, the lienholder merely stands in the shoes of the insured. Hunt, supra. If Nationwide is not obligated to tender payment to its insured, the loss-payable clause does not inure to the benefit of American Credit. This loss-payable clause applies only in the event of a valid first-party claim under the policy between the insured and Nationwide. American Credit could only receive the benefit of the loss-payable clause should Nationwide have tendered payment to its insured without protecting American Credit’s rights as a lienholder, or had otherwise participated in some way to the derogation of American Credit’s rights.
In this case, because there was never a first-party claim, I am at a loss to discern why Nationwide is now liable for its insured’s misapplication of proceeds received from the at-fault party’s carrier. Nationwide’s obligation does not extend to insuring American Credit against losses over which Nationwide had no control.5 American Credit must look solely to the insured who failed to submit to American Credit insurance proceeds from Allstate when she defaulted on the loan.6
*632In my opinion, the loss-payable clause found in the insurance contract between Nationwide and its insured did not protect American Credit’s interest where that interest was damaged by the acts of a third-party or by the insured. I would affirm.

. While I do not believe the interpretation of the loss-payable clause controls this case, I disagree with the majority's statement that the clause be strictly construed against Nationwide in favor of American *631Credit. Nationwide’s failure to define the term “conversion” in the insured’s policy does not necessarily require us to apply that term narrowly to these facts. The loss-payable clause in this case is not an exclusion of coverage for the insured but exists for the benefit of a lienholder who is not a party to the insurance contract.

. Indeed, there is no indication that Nationwide was ever made aware of the event which occasioned damage to the vehicle.

. Insured was under no obligation to American Credit to repair her vehicle with the money paid by Allstate so long as she made payments on the loan from American Credit.