As a Marina owner, you need to make sure that your marina insurance coverage is as accurate as possible – right down to who receives the check in the event of a claim. The following example shows how devastating the consequences of inaccuracies can be.
A security agreement was entered into by the seller of a business and its buyer to secure the payment of the unpaid balance of the purchase price. The agreement required the buyer to maintain fire insurance on the property with the seller to be named as a “loss beneficiary” and provided with a copy of the policy.
Only the buyer was named in the policy that it obtained, and the covered property was totally destroyed by fire ten months after its issue. The seller notified the insurer of its claim to the proceeds of the policy. But the carrier sent a settlement check to the buyer, who deposited it, a month later. The check did not include the seller as a payee; it had not been included as a loss payee in the policy.
In the course of legal action to recover the proceeds of the policy, the insurer’s motion for summary judgment dismissing the complaint against it was granted.
The seller argued that it “had an equitable lien on the proceeds of the fire insurance policy, and thus, the carrier was negligent in failing to name the plaintiff as a payee on the proceeds check.”
The appeal court said that, because the seller was not a party to the insurance contract, the insurance company did not have an obligation to investigate its claim to the policy proceeds. It quoted: “….a secured creditor is in the best position to police the enforcement of its agreement with its debtor with respect to insurance coverage on collateral.”
The appeal court affirmed granting the insurer’s motion for dismissal of the complaint against it.
Does your marina insurance coverage accurately reflect your current business situation? A lot may have changed– feel free to call us at 800-462-6435 ext. 241 to answer your questions, or to determine if a Risk Reduction Workshop is right for you.
(ROSARIO-PAOLO, INC., Appellant v. C & M PIZZA RESTAURANT, INC., Defendant; INVESTORS INS. CO.OF AMERICA, INC., Respondent. New York Supreme Court, Appellate Division, Second Judicial Department. No. 91-06081. June 28, 1993. CCH 1993-94 Fire and Casualty Cases, Paragraph 4442.)