Allstate Ins. Co. v. Thompson, 64104

• Decision Date: 23 November 1982
• Docket Number: No. 64104,64104
• Citation: 164 Ga.App. 508,297 S.E.2d 520
• Parties: ALLSTATE INSURANCE COMPANY v. THOMPSON.
• Court: Georgia Court of Appeals

Page 520

297 S.E.2d 520

164 Ga.App. 508

ALLSTATE INSURANCE COMPANY v. THOMPSON.

No. 64104.

Court of Appeals of Georgia.

Nov. 23, 1982.

Brian A. Boyle, Robert C. Semler, Atlanta, for appellant.

Donald G. Loggins, Dalton, for appellee.

SOGNIER, Judge.

Gerald Thompson sued Allstate Insurance Company to recover for fire loss under the terms of a homeowner's insurance policy. The jury returned a verdict in favor of Thompson and Allstate appeals.

The policy in question was purchased by Thompson as the sole owner of the house and he insured the house in the amount of $31,000. Subsequently, Thompson and his wife were divorced, and pursuant to the divorce decree, he conveyed to her one-half of his interest in the house. As a part of the Thompsons' separation agreement the parties agreed to sell the property at fair market value upon certain stated events, and to divide the proceeds equally. Both Thompson and Ms. Thompson had first option to buy the interest of the other party. Ms. Thompson and their son had possession of the house, but Thompson was liable for and made mortgage payments on the outstanding indebtedness of $11,000. Ms. Thompson was not listed as a named insured on the policy, nor was Allstate notified of the conveyance. The house was completely destroyed by fire. Allstate paid Thompson $15,000 for the house but informed Thompson that his former wife's one-half interest was not covered by the insurance. Thompson sued to recover the remaining one-half interest. The jury's verdict awarded Thompson $15,500 for the house.

Allstate contends that the trial court erred by failing to direct a verdict in its favor because Thompson did not have an insurable interest in Ms. Thompson's one-half interest in the house. The Standard Fire Policy in the contract of insurance provided that "... this Company does insure ... THE INSURED NAMED IN THE DECLARATIONS ..., to the extent of the actual cash value of the property at the time of loss, but not exceeding the amount which it would cost to repair or replace the property ... nor in any event for more than the interest of the insured, against all DIRECT LOSS BY FIRE...." Thus, appellant argues that Thompson was entitled only to an amount equal to his interest in the house.

This court has recently discussed the issue of an insurable interest in a case factually similar to the instant case. See Allstate Ins. Co. v. Ammons, 160 Ga.App. 257, 286 S.E.2d 765 (1981). In Ammons, Chief Judge Quillian stated the applicable law as follows: "Code Ann. § 56-2405 provides: 'No insurance contract on property or of any interest therein or arising therefrom shall be enforceable except for the benefit of persons having, at the time of the loss, an insurable interest in the things insured. "Insurable interest" as used in this section means any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment. The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment thereof.' (Ga.L.1960, pp. 289, 658.)

"The principles applicable here have been enunciated in our cases on this subject. As set forth in American Reliable Ins. Co. v. Woodward, 143 Ga.App. 652(1) (239 S.E.2d 543): 'Title is not the sole test for determining an insurable interest. Gordon v. Gulf Am. Fire etc. Co., 113 Ga.App. 755, 760(2) (149 S.E.2d 725) (1966). "It is sufficient if the insured holds such a relation to the property that its destruction by fire would result in pecuniary loss to him. 'The test of insurable interest in property is whether the insured has such a right, title, or interest therein, or relation thereto, that he will be benefited by its preservation and continued existence, or suffer a direct pecuniary loss from its destruction or injury by the peril insured against.' " ' See Shield Ins. Co. v. Kemp, 117 Ga.App. 538(2) (160 S.E.2d 915); Ga. Farm Bureau Mut. Ins. Co. v. Mikell, 126 Ga.App. 640(1) (191 S.E.2d 557)." Id. at p. 259, 286 S.E.2d 765.

Whether or not Thompson had an insurable interest in Ms. Thompson's one-half interest in the property depends on whether Thompson suffered a pecuniary loss over and above his one-half interest in the property as a result of the fire. See Ammons, supra; Huckaby v. Ga. Farm Bureau Mut. Ins. Co., 140 Ga.App. 493, 231 S.E.2d 378 (1976). Allstate argues that...