In an opinion just released this morning (April 10, 2015), the Fifth District Court of Appeals in Accident Cleaners, Inc., A/A/O Joseph Gerena v. Universal Insurance Company of North America, reversed the Trial Court’s Order dismissing with prejudice Accident Cleaners, Inc.’s breach of contract claim. The Court held that as a post loss assignee of the right to recover under a homeowner’s insurance policy, Accident Cleaners, Inc. was not required to have an insurable interest in the homeowner’s home at the time of loss, pursuant to Fla. Stat. 627.405.
In construing Fla. Stat. 627.405 to only require the property owner who holds the policy to have an insurable interest at the time of loss, the Fifth DCA reasoned that imputing the property owner’s insurable interest to the post-loss assignee allows both the insurable-interest requirement and free assignability of post-loss claims to coexist.
However, the Insurable Interest Statute (Fla. Stat. 627.405) provides: “No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.” This is a statute specific to property insurance policies only. The purpose of the statute is so that assignability would not co-exist and an insurance carrier would not have the unbargained for risk of having to deal with a vendor whose only interest is to maximize profits as opposed to the insured’s interest of restoring the property to its pre-loss condition.
Currently, this same issue is up on appeal before the Fourth District Court of Appeal. A decision to the contrary by the Fourth District Court of Appeal would create a conflict among the two Districts on the issue, requiring it to be decided by the Supreme Court of Florida. As a result, if the Insurable Interest Statute is not raised as a defense, it will not be preserved for an appeal should another District Court of Appeal disagree with the Fifth DCA’s decision.