We also wrote the individual's homeowners and auto insurance on 3/2/09.

In the process of writing this coverage, the individual also asked us to write his flood insurance on the commercial building. He had this coverage with a previous agent through another service provider. That policy was in the name of the individual, and we duplicated that coverage. However, we did not question the ownership of the building or contents.

On 11/23/11, the insured filed a claim with us for a flood loss, both building and contents. Upon investigation, the carrier paid $39,535 on the building but denied the insured's claim on the contents in the amount of $11,189.52, due to the named insured not having an insurable interest. The carrier determined that the contents were owned by the LLCs, which were not named on the policy.

Also, when the premium was paid, one-third of the premium was paid by each entity, in separate checks, all cashed by the carrier.

Does the individual, being a member of the LLCs, have an insurable interest in the contents?

Pennsylvania Subscriber

Only the LLC would have an insurable interest in the property belonging to the LLC and the individual, while a member of the LLC, would not have an individual interest. We agree with the carrier: the LLC would need to be an insured on the individual's policy in order for there to be coverage for the LLC's personal property inside the individual's building.