Academic journal article Journal of Risk and Insurance

Insured Co-Tenant May Recover More Than Value of Fractional Legal Interest in the Property Where Co-Tenant Occupies Property and Insures to Full Value

Academic journal article Journal of Risk and Insurance

Insured Co-Tenant May Recover More Than Value of Fractional Legal Interest in the Property Where Co-Tenant Occupies Property and Insures to Full Value

Article excerpt

Delk v. Markel American Ins. Co., P.3d, 2003 Okla. LEXIS 104 (Supreme Court of Oklahoma--October 21, 2003)

In 1998, James Delk executed a warranty deed conveying equal fractional interests in his residence to six relatives, including his daughter, Debra, who became the plaintiff in this case, as well as grandson John (Debra's son), and children Julian, Cheyenne, Tanner (Mabry), and nephew Cody. Debra lived with John and his family in the home until it was destroyed by fire in September 2001. (See id. at *3-*4.)

The home was insured under a Markell American Insurance Company policy with limits of $104,000 issued to Debra Delk as the "sole named insured." The application "did not ask [Debra] about the nature or extent of her legal title." (Id. at *4.) Debra took over the policy from her father and made the premium payments of $786.00 per year. After the fire, Debra made a claim for benefits. On investigation, the insurer was willing to pay her only one-sixth of the benefits, reflecting her share of interest in the burned property.

Debra sued for the full policy benefits in an action commenced in federal court in Oklahoma. The federal court was unable to determine Oklahoma law on the subject and certified to the Oklahoma Supreme Court a question as to whether a policyholder was limited to recovering only up to the amount of her percentage interest in the property, the procedure was established and permitted by the Oklahoma Revised Uniform Certification of Questions of Law Act, 20 O.S. 2000 [subsections] 1601, 1602. The Supreme Court reformulated the question sent to it by the federal court to read:

   May an insured co-tenant who occupies the insured property as her
   home and who has insured the property for its full value recover
   (within the policy limits) more than the value of her fractional
   legal interest in the property?

See id. at *2.

The Court answered "yes" to the question, finding that Debra had sufficient insurable interest under the facts of the case to qualify as an insured subject to full policy benefits. In making this determination, the Delk v. Markell Court applied the prevailing "factual expectancy" test for determining the existence of an insurable interest and concluded that Debra clearly met the test as someone who was a tenant in the home, procured the policy, paid the premiums, and appeared to be the family member charged with arranging to apply the policy benefits to rebuilding or replacing the home in which she and several family members resided. …

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