Insurance And Car Ownership

Car owners from Grand Prairie, Saginaw, Colleyville, Keller, Grapevine, Haslet, Boyd, Rhome, Hurst, Euless, Bedford, and other areas in the Dallas – Fort Worth metroplex would be interested in this case.
The style of the case is, Hector Valdez v. Colonial County Mutual Insurance Company. The opinion was issued in 1999, by the Texas Court of Appeals in Austin. It is an appeal from a summary judgment ruling in favor of Colonial. Here is some background.
On November 9, 1994, Valdez purchased insurance on his 1992 Plymouth Acclaim. Shortly after Christmas of that same year, Valdez sold and transferred the title of the vehicle to his adult son, Rene. Rene, with cosigner Liliana De La Garza, obtained new financing for the vehicle from Mercantile Bank. On December 29, 1994, Valdez notified Colonial about the new lien holder. Valdez did not report the change in title to Colonial, but Colonial’s Change in Policy Request form did not request such information.
At the time he purchased the car, Rene worked in Mexico City. Because he could not take the car into Mexico, Rene left the vehicle with Valdez at Valdez’s residence. Valdez continued to use the vehicle and pay the policy premiums. He renewed the policy from November 9, 1995, through November 9, 1996. On January 14, 1996, more than a year after Rene bought the car, the vehicle was stolen while parked outside Valdez’s residence. Valdez filed a claim with Colonial. Despite accepting Valdez’s premium payments for over a year after the reported change in lienholder, Colonial refused to honor the claim and filed suit seeking a declaratory judgment that Valdez did not have an insurable interest in the stolen vehicle.
There were a couple of legal arguments in this case but the relevant issue for this article is the one dealing with “insurable interest.” Colonial argued and the trial court agreed that this was the main point to be resolved.
This appeals court then said that for Valdez to recover under the automobile insurance policy, he need only have an insurable interest in the vehicle; ownership of the covered vehicle is not required. An insurable interest exists when the insured “derives pecuniary benefit or advantage by the preservation and continued existence of the property or would sustain pecuniary loss from its destruction.” This is citing from Couch on Insurance. An insurable interest may be defined as any lawful and substantial economic interest in the safety or preservation of the subject free from loss, destruction or pecuniary damage. The purpose of the insurable interest requirement it to discourage insurance for illegitimate purposes.
Citing another legal treatise this court said that while an insurable interest “is not dependent upon an absolute right to ownership of, or possession of, property, and while neither legal or equitable title is necessary, a person must have such a right or interest as the law will recognize and protect.” Citing an Austin Court of Appeals case, Jones v. Texas Pac. Indem. Co., this court stated “If a claimant cannot suffer any pecuniary loss or derive any benefit from the property, he has no insurable interest.”
The Texas Supreme Court in, Smith v. Eagle Star Insurance Co., where a house located on land owned by the State was destroyed by fire. said, “It was undisputed that Mrs. Smith had undisturbed use of the house prior to and at the time she purchased fire insurance on the house and at the time the loss occurred. Because the fire caused her a loss of this use, Mrs. Smith was entitled to the insurance proceeds because she held an insurable interest in the property.”
Based on the language in the above treatise and prior case law this appeals court reversed the summary judgment ruling in favor of Colonial and remanded the case to the trial court for further findings.
These cases are fact specific and the assistance of an experienced Insurance Law Attorney is a must in order to make sure the insureds’ interests are properly protected.