Insurer’s Only Obligation is to the Person Insured

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Who’s on First or Only Person Insured May Collect on a Fire Policy

It is axiomatic that first party property insurance is a contract of personal indemnity. It does not follow title to the land and only pays those who are named on the policy as an insured and have an insurable interest. Someone who has an insurable interest but is not named has no right to the policy.

Konstantinos Kapnisis (Kapnisis) appealed from the judgment after the trial court granted summary judgment in favor of Colony Insurance.

FACTUAL BACKGROUND

Kapnisis signed a purchase agreement and a month-to-month lease to rent Big Oaks pending the close of escrow. The lease required him to pay Big Oaks’ insurance premium in order to operate the restaurant. Colony subsequently issued a policy naming Big Oaks as the insured. Two weeks later, a fire destroyed Big Oaks. Colony issued checks payable to “Big Oaks” and sent payment to the mailing address listed in the insurance policy.

Kapnisis failed to obtain the required documents, escrow never closed. Therefore, title to Big Oaks did not transfer to Kapnisis.

INSURANCE POLICY

Colony's policy insured “Big Oaks”. The listed mailing address was Patel’s residential address. Kapnisis paid the insurance broker the premium.

THE FIRE

On August 11, 2018 a fire broke out at Big Oaks and the entire building burned down. 

In September 2018, Colony issued a series of checks made payable to “Big Oaks” for the fire loss. Colony paid a total of $335,368.76. Colony sent the checks to the policy address.

THE LAWSUIT

Kapnisis initiated this lawsuit against Colony. The trial court granted summary judgment as to all causes of action and entered judgment in favor of Colony.

DISCUSSION

The interpretation of an insurance policy is a question of law and follows the general rules of contract interpretation.

Since Kapnisis did not dispute that “Big Oaks” was the named insured on the Policy and that the insurance proceeds were mailed to the address listed on the Policy; and that neither Kapnisis nor his address were listed on the Policy; Colony satisfied its contractual obligations to pay policy benefits to “Big Oaks” at the address listed on the Policy.

ZALMA OPINION

Kapnisis  was not an insured of the policy and it only insured the risks faced by the actual owner of “Big Oaks” Ms. Patel. Insurance only pays the person insured as long as that person has an insurable interest in the property. Patel, as the owner of Big Oaks had that interest and was named; Kapnisis had an insurable interest but was not named.

© 2022 – Barry Zalma

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