Question: I have a VA policyholder. I don'thave the exact policy form yet but it is an HO 03 policy withTravelers.

A hail storm damaged the risk in June 2016. Thepolicyholders subsequently sold the house in July 2016. Afterthe new owners closed and moved into the property, they wereadvised of hail damage to the cedar shake roof by acontractor.

The new owners contacted the policyholders through theirrealtor and the policyholders — who now no longer owned thehouse — agreed to file a claim for the damage.

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Travelers extended coverage for the loss.

Then, the contractor disputed the claim amount. Travelerssubsequently sent a letter to the policyholders stating they wouldnot extend any more coverage because the policyholders lostthe insurable interest in the property when they sold the house.They would not even release depreciation on what they alreadycovered.

The policyholders then agreed to hire me as a publicadjuster at the request of the new owners and signed an assignmentof benefits to the new homeowners. The insurer is refusing tochange their stance.

My thinking is:

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         1. The insurer was the insurer on record when the lossoccurred and therefore owes for the loss.
         2. The policyholders have the right to use the funds at adifferent location.
         3. The insurer already extended coverage so they waived theirrights to deny payment on the claim.
         4. Benefits were assigned to the new owner so there is stillan insurable interest in the house. (That was done after thesale, however.)

Do the policyholders have a case to pursue the claim or have they lost thatability?

— Ohio Subscriber

Answer: I'm looking at the HO 00 03 05 11; theTravelers policy may be different. The ISO form provides coveragefor losses that occur during the policy period. The insured's ownedthe property when the damage occurred, so they had insurableinterest at the time, and they gave prompt notice as is required bythe policy.

The ISO from requires the assignment to be approved in writingby the carrier. Did Travelers approve the assignment? If theassignment was accepted, then you have a claim being made beyondthe policy by people who didn't own the property at the time; thatcould a problem, however the policy at issue was in effect at thetime of loss, so it should still apply.

Who received the original payment, the original insured's or thebuyers? Travelers paid part of the loss and is now claiming thatthe original insured's have no further claim, even though they paidpart of the loss. But if the assignment was accepted, then thepayment should have been made to the buyers, and the rest of theclaim should be paid. Travelers accepted the loss and madepayment, the rest of the claim should be paid.

You have an issue of fact as to who received the originalpayment and when the assignment took place. I think that's a largepart of the issue. If the assignment wasn't accepted, then theoriginal insured's are making a claim for property they no longerown.

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Question: Our policyholder sold his vehicle to a private owner and nevernotified the insurer so the vehicle could be removed from thepolicy. A short time thereafter, the vehicle was involved in anauto accident. It turns out the private owner did not transfer thetitle into his name, nor does he carry an active policy ofinsurance for the vehicle purchased from our policyholder. Is thereliability or collision coverage for this loss under our insured'spersonal auto policy?

— ConnecticutSubscriber

Answer: Presuming the vehicle was stilllisted on the policy as a covered auto and shown in thedeclarations, and since the named insured is an insured for the useof any auto, if your insured is found liable, the PAP will apply.There is no applicable exclusion based on the information you haveprovided. As for collision coverage, as long as the car is acovered auto by definition and the PAP has collision coverage andthere is no applicable exclusion based on the facts of theaccident, the PAP will apply to a collision claim.

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After a private owner sells their vehicle, it's always agood idea to follow up on the coverage transfer to the new owner.(Photo: iStock)

Question: Farm Bureau Mutual InsuranceCompany's Policy States, “Change/Assignment of Interest… No changeof interest in this policy is effective unless we consent inwriting. However, if a 'named insured' dies, we will protect the legalrepresentative as 'named insured.'”

The insured signs an assignment with a windshield repairshop for the payment of the windshield repair to be paid to thewindshield repair shop directly. There is a second assignment fromthe windshield repair shop to NEON LLP for Neon to collect thewindshield repair shop's outstanding repair statements from theinsurer.

Does the policy provision stated above preclude either theNEON or the repair shop to stand in the shoes of the insured? Doesthe policy provision preclude assignments as they pertain torecovery of the insured's proceeds due under the policy? Only theinsured can receive monies due under the policy?

— PennsylvaniaSubscriber

Answer: In the situation you present,depending on how the assignment is worded, the insured has nottransferred the policy rights to the repair shop; he has simply transferred oneparticular claim payment to the provider of the service. Unless theassignment states that all policy benefits for the remaining termof the policy are assigned to the shop, the insured is still theinsured on the policy, will presumably continue to pay the premiumsand there has been no change in the nature of the risk. Anassignment of benefits is not an assignment of interest in apolicy.

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Question: In the BAP, CA 00 01, underthe Transfer of Rights of Recovery Against Others to Us clause, whois the “person or organization” referring to? Is it the namedinsured? Is it others? If so, who would that be?

I always took the wording to mean that the named insured'srights of subrogation are transferred to the insurance company. Butothers in the office thought the “person or organization” referredto others such as an additional insured.

What is your opinion?

— PennsylvaniaSubscriber

Answer: The key word in the transfer ofrights of recovery clause is the word “any.” Thismeans that any person or organization — that is, the named insured,other insureds, claimants — any person or organization to whom orfor whom the insurer makes a payment. If that person ororganization has rights of recovery against another entity, theinsurer then has those rights transferred to it.

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