ADJUSTERSINTERNATIONAL.COM 7 consent. Upon loss, however, the risk disappears and nothing remains except the assured’s right to payment — a mere chose in action which may be assigned without the limitations of any other chose in action.’”18 As noted above with respect to Bronx Entertainment and other cases, the purchaser cannot assert new rights of its own that did not belong to the seller/ assignor. But whatever the extent of the seller’s claim— it is fully assignable, in whole or in part. The assignee/buyer can then collect the value of that seller’s claim against the insurer. This all makes perfect sense and it is fair. On the one hand, if a seller owns a damaged property that will cost $500,000 to fix, with $500,000 in BI during the repair period, and the seller conveys the property without a claim assignment, such that the buyer has to come out of pocket to complete repairs and incur the BI loss, the buyer will reduce its purchase price by $1 million. The seller’s $1 million discount in the sale price is balanced by the seller’s right to collect $1 million in insurance (and the insurer pays the same $1 million it was obligated to pay absent the sale). On the other hand, if the seller conveys the damaged property with a claim assignment, all other things equal, the buyer pays to the seller the same fair market value price it would pay absent the assignment, makes the repairs themselves, and then collects the same $1 million (and again, the insurer pays the same $1 million it was obligated to pay absent the sale). In either case, the insurer always pays the same amount. To conclude, when a commercial property is sold in the middle of a claim, insurers sometimes try to cut off a claim. But there is nothing about the sale of a property that provides an insurer with the opportunity to sidestep its payment obligations. Parties to the transaction should be careful with the insurance-related language in an assignment, a purchase and sale agreement, and other documents related to the transaction. ____________________ 1 See, e.g., BA Properties, Inc. v. Aetna Cas. & Sur. Co., 273 F.Supp.2d 673 (D. Virgin Islands) (“BA Properties”) (seller had “insured interest” in hotel at time of hurricane loss and before sale date); Cigna Prop. & Cas. Ins. Co. v. Verzi, 684 A.2d 486 (Md. Ct. Spec. App. 1996) (policyholder entitled to fire insurance proceeds when building was destroyed by fire despite contingent contract to demolish building because policyholder had insurable interest in the full value of the building at the time of loss); Morgan v. American Security Ins. Co., 522 So.2d 454, 455 (1st Dist. Fla. 1988) (rule is the same in Florida: “the insurable interest of the parties to an insurance contract is determined by the facts existing at the time of the loss”); Fl. St. § 627.405 (“No contract of insurance of property or of any interest in property or arising from property shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss.” [emphasis added]). 2 BA Properties, 273 F.Supp.2d at 681. 3 BA Properties, 273 F.Supp.2d at 681-82, citing Florida Statute § 627.405. See note 1. 4 BA Properties, 273 F.Supp.2d at 683 (emphasis added). 5 BA Properties, 273 F.Supp.2d at 681-82 (emphasis added). 6 BA Properties, 273 F.Supp.2d at 683 (citing Hampton Foods, Inc. v. Aetna Cas. and Sur. Co., 787 F.2d 349, 354 [8th Cir. 1986]). 7 BA Properties, 273 F.Supp.2d at 684 (citations omitted). 8 BA Properties, 273 F.Supp.2d at 684 (citations omitted). 9 See, e.g., Steel Products Co. v. Millers Nat’l Ins. Co., 209 N.W.2d 32 (Iowa 1973) (where “for one reason or another, an insured does not repair, replace, or rebuild the insured premises . . . courts have consistently held the reduced earnings computation is based on the theoretical period it would have taken to repair, replace or rebuild the premises with due diligence”); Beautytuft, Inc. v. Factory Ins. Assoc., 431 F.2d 1122 (6th Cir. 1970) (the insured recovers the full “theoretical” time period it would have taken to rebuild the destroyed plant even if not rebuilt); Hawkinson Tread Tire Serv. Co. v. Indiana Lumbermans Mut. Ins. Co., 245 S.W.2d 24 (Mo. 1951) (same); Anchor Toy Corp. v. American Eagle Fire Ins. Co., 155 N.Y.S.2d 600 (N.Y. Cty. 1956) (where the insured did not rebuild, the BI claim remained defined by the theoretical rebuilding time at the insured site); Grand Pacific Hotel Co. v. Michigan Commercial Ins. Co., 90 N.E. 244 (Ill. 1909) (the insurer paid the BI claim through the date that it would have taken to rebuild a destroyed hotel). 10 SR International Business Ins. Co. Ltd. v. World Trade Center Properties et al., 2005 U.S. Dist. Lexis 13001 (S.D.N.Y. 2005).
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