Fundamentally, property insurance claims are critically distinguishable from liability claims in that property insurance is generally intended only to encompass first-party claims. See Parks Real Estate Purchasing Group v. St. Paul Fire & Marine Ins. Co., 472 F.3d 33, 41 (2006) (citing 2 Ostrager & Newman, Insurance Coverage Disputes § 21.01[a], at 1303 (13th ed. 2006)). This is so, because the subject of a property coverage property is a thing, whereas the subject of a liability policy is a person. Stated differently, as a technical matter of semantics it may be a non sequitur to refer to property claims as “first-or-third party” claims because—contrary to liability policies, where coverage is affixed to a person or “party”—coverage is affixed
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Accordingly, “[t]he contract of insurance, being one of indemnity, the insured must have such an interest in the property as that its destruction will result in pecuniary loss to him. But it is not necessary he shall have a title, provided his interest, whatever it may be, is such that it would be impaired or injured by its destruction.” Hartford Fire Ins. Co. v. Keating, 86 Md. 130, 148 (1897). Moreover, “[a]n insurable interest exists whenever there is a reasonable degree of probability that the insured will suffer loss by reason of any contingency which affects the subject of the insurance.” Commonwealth Cas. Co. v. Arrigo, 160 Md. 595, 598 (1931).
Today, however, Maryland’s General Assembly as elected to define an insurable interest as:
[A]n actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance against loss, destruction, or pecuniary damage or impairment to the …show more content…
Co. v. Nat’l Fire Ins. Co., 988 F.Supp. 2d 530, 534 (D. Md. 2013). In that case, the District of Maryland recognized that Maryland appellate courts had yet to articulate the outer penumbra of interests that constitute “actual, lawful, and substantial economic” interests. Id. at 535. Nevertheless, the court emphasized that that a broad interpretation of § 12-301 was consistent with persuasive authority from other jurisdictions. Id. (quoting Edgewood Manot Apt. Homes, LLC v. RSUI Indem. Co., 733 F.3d 761 (7th Cir. 2013) (All that is required for one to have an insurable interest in property is that the insured will suffer an economic loss if the property is destroyed.” (internal quotation omitted))). Accordingly, the court in Selective Way determined
Accordingly, “[t]he contract of insurance, being one of indemnity, the insured must have such an interest in the property as that its destruction will result in pecuniary loss to him. But it is not necessary he shall have a title, provided his interest, whatever it may be, is such that it would be impaired or injured by its destruction.” Hartford Fire Ins. Co. v. Keating, 86 Md. 130, 148 (1897). Moreover, “[a]n insurable interest exists whenever there is a reasonable degree of probability that the insured will suffer loss by reason of any contingency which affects the subject of the insurance.” Commonwealth Cas. Co. v. Arrigo, 160 Md. 595, 598 (1931).
Today, however, Maryland’s General Assembly as elected to define an insurable interest as:
[A]n actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance against loss, destruction, or pecuniary damage or impairment to the …show more content…
Co. v. Nat’l Fire Ins. Co., 988 F.Supp. 2d 530, 534 (D. Md. 2013). In that case, the District of Maryland recognized that Maryland appellate courts had yet to articulate the outer penumbra of interests that constitute “actual, lawful, and substantial economic” interests. Id. at 535. Nevertheless, the court emphasized that that a broad interpretation of § 12-301 was consistent with persuasive authority from other jurisdictions. Id. (quoting Edgewood Manot Apt. Homes, LLC v. RSUI Indem. Co., 733 F.3d 761 (7th Cir. 2013) (All that is required for one to have an insurable interest in property is that the insured will suffer an economic loss if the property is destroyed.” (internal quotation omitted))). Accordingly, the court in Selective Way determined