Court: Insured cannot recover for a loss as a third-party beneficiary
A Florida court ruled that a Miami homeowner could not recover under a lender-placed insurance policy for damage caused by Hurricane Irma.
A federal district court in Florida has ruled that a Miami homeowner could not recover under a lender-placed insurance policy for damage caused to his home by Hurricane Irma where he was named as the borrower and not the named insured and where he did not allege that the damage exceeded the amount due on his mortgage.
The case
After the home Luis Suarez owned in Miami suffered damage during Hurricane Irma, Suarez sued Integon National Insurance Company, which had issued a lender-placed residential insurance policy on the property. The Integon policy named the insured as Seterus, Inc., the mortgage company, and listed Suarez as the “borrower.”
Integon moved to dismiss, asserting that Suarez lacked standing to sue under the policy because he was not a named insured. Integon also asserted that, as the borrower on the policy, Suarez only could recover for losses exceeding Seterus’ secured interest.
In response, Suarez asserted that he could recover for the loss as a third-party beneficiary.
The insurance policy
The Integon insurance policy stated:
The contract of insurance is only between the Named Insured and Integon National Insurance Company. There is no contract of insurance between the Borrower and Integon National Insurance Company. The insurance purchased is intended for the benefit and protection of the Named Insured, insures against loss only to the dwelling and other structures on the described location, and may not sufficiently protect the Borrower’s interest in the property.
It also stated:
If the amount of loss exceeds the unpaid principal balance, the borrower may be entitled, as a simple loss payee only, to receive payment for any residual amount due for the loss. . . Other than the potential right to receive such payment, the borrower has no rights under this residential property form.
The district court’s decision
The district court granted Integon’s motion.
In its decision, the district court explained that the contracting parties’ “clear and manifest intent,” as reflected in the policy language, was “not to primarily benefit the third-party” — Suarez.
The district court noted that Suarez was not listed as a named insured and was specifically excluded from coverage. The policy “expressly” stated that it was for the benefit of Seterus as the named insured, not Seterus as the named insured and Suarez as the borrower, the district court ruled.
Accordingly, the district court concluded, the contracting parties did not intend to make Suarez a third-party beneficiary and because Suarez had not argued that the amount of the loss exceeded Seterus’ interest in the property, it granted Integon’s motion to dismiss.
The case is Suarez v. Integon National Ins. Co., No. 19-22006-CIV-MORENO (S.D. Fla. Oct. 15, 2019).
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