News : Excess Recovery Forbidden For Insureds Owning Separate Policies

EXCESS RECOVERY FORBIDDEN FOR INSUREDS OWNING SEPARATE POLICIES


The Court of Appeal has opined that two owners of separate fire insurance policies covering the same residence cannot each collect the full value of the home under their respective insurance policies when the home is destroyed.

In the case of Ann Burns v. California Fair Plan, et al., Los Angeles County Superior Court case no. BC323595, the holder of a life estate on a residence, and a trust holding the remainder interest, each purchased fire insurance policies on the dwelling from different carriers.

When the home was destroyed by fire, the life tenant and the trust brought this action, both seeking to obtain the full value of the residence under their respective policies of insurance - which amounts (when combined) would have exceeded the value of the home itself.

Invoking the "other insurance" provision contained in each policy, the insurers moved for Summary Judgment on the basis that they had fulfilled their contractual obligations by paying the life tenant and the trust the full value of the home on a pro-rata basis according to the value of their insureds' respective interests in the destroyed home. The trial court agreed and granted Summary Judgment in favor of the carriers.

On appeal, the Appellate Court confirmed the trial court's decision by opining that multiple insureds cannot collectively recover more than the full value of the property destroyed.

This important Decision has been brought to you by Firm Partner Timothy Lake. Mr. Lake is Chair of the Firm's Insurance Coverage and Bad Faith Practice Group, which represents various insurance carriers on a broad range of coverage issues and related matters. If you would like to speak with Mr. Lake about how he can help you with claim reduction, please contact him at (818) 205-9955. For a complete copy of the Appellate Court's Decision in this case, please click on the link below.


Click here to view PDF of this article



Related Attorney(s):
Timothy D. Lake

Related Practice Area(s):
Bad Faith and Coverage

Copyright © 2009 Tharpe & Howell. All Rights Reserved.