In this week’s episode of my continuing blog series, we travel to California to see how the Golden State defines Insurable Interests. Spoiler Alert: You need to read the policy!

In California, the general rule, “limits recovery of proceeds under an insurance contact to the named insureds,”1 and that “[a]n insurance contract is personal and provides protection for the named insured, not for a general class of ‘actual owners.’”2 Further, not only do they have to be the named insured, but they must also have an insurable interest.3 Without an insurable interest, the insurance contract will be void.4

Under California law, an ‘insurable interest’ means a ‘pecuniary interest.’5 “Simply phrased, an insurable interest exists when “the insured has a direct pecuniary interest in the preservation of the property and … will suffer a pecuniary loss as an immediate and proximate result of this destruction.”6

As noted above, and in several of my prior posts, you need to read the policy and verify the claimant has an insurable interest. Further, when practicing in California, make sure your claimant is also your named insured. It will make the difference between an easy going claim, and one rife with problems.

As always, I’ll leave you with a (mildly) related tune, here’s Phantom Planet with California:

https://youtube.com/watch?v=wq-S8CIU7VA%3Frel%3D0


1 Bonaparte v. Allstate Ins. Co., 49 F.3d 486, 488 (9th Cir. 1994) (citations omitted).
2 Id.
3 Id. at 489.
4 West’s Ann. Cal. Ins. Code § 280, CA INS § 280.
5 Id. at 488 (citations omitted).
6 California Food Service Corp. v. Great American Ins. Co., 130 Cal.App.3d 892, 897.

  • Matt Christensen

    Charles,

    Would you please do your next blog of insurable interest on those situations in Minnesota? Specifically, missing the named insured on a policy (building owner shares common ownership with the building’s tenant, but have different LLC’s and only the business is listed). Also, property managers insurable interest when they own a small % of each property or no ownership at all.

    Also, I’ve spoken with business owners that insure their vehicle either through their business or personal lines and double title with the state listing both on the title. I would imagine that would be a cluster in a claim…

    Any case law and guidance would be awesome!

    MC