In this episode we’re headed to Rhode Island, the Ocean State, to define insurable interests.
Rhode Island case law on the issue dates back to the 1800’s. In Cronin v. Vermont Life Insurance Company, the Supreme Court of Rhode Island held that to recover on an insurance policy one needed an insurable interest.1 Rhode Island also follows the principle that we’ve seen many other states follow, a “person has an insurable interest in property, by the existence of which he will gain an advantage, or by the destruction of which he will suffer a loss, whether he has or has not any title in … the property itself.”2
Further, that insurable interest must be determined as of the date of loss:
[G]enerally, the extent of an insurable interest in property should be determined as of the date of the loss,  for example,  a subsequent sale of the property on which the insured building had been located before it was destroyed by fire does not change the status of the property as of the date of the fire for insurance purposes.3
Be sure you check those policies and make certain that not only does your insured have an interest, but that the date of loss was in the policy period!
As always, I’ll leave you with a (mildly) related tune. Here’s Jack Johnson with Only the Ocean:
1 Cronin v. Vermont Life Ins. Co., 20 R.I. 570 (1898).
2 Sullivan v. Amica Mut. Ins. Co., 1976 WL 177165 (R.I. Super. 1976).
3 Rhode Island Joint Resinurance Ass’n v. O’Sullivan, 91 A.3d 824,828 (R.I. 2014).