Kimball v. Standard Fire Insurance Co. of Hartford
578 So.2d 546, 1991 WL 57837, 1991 La. App. LEXIS 759 (1991)
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Rule of Law:
When a co-owner of property, who also possesses a usufructuary interest, procures an insurance policy in their name alone and for their sole benefit, the proceeds from that policy belong exclusively to the named insured. Other co-owners (naked owners) with an insurable interest are not entitled to a share of the proceeds if their interests were not covered by the policy.
Facts:
- Bobbie Clark Kimball and her husband, Guy W. Kimball, co-owned a family home.
- After Guy Kimball's death, Bobbie Kimball and their children became co-owners of the home, with Bobbie Kimball also holding a usufruct (the right to use the property).
- Bobbie Kimball renewed a fire insurance policy on the home, listing herself as the sole insured and paying the premium herself.
- Bobbie Kimball was later incarcerated after pleading guilty to conspiracy to commit her husband's murder.
- On May 19, 1983, while Kimball was in jail, the insured home was completely destroyed by a fire that was suspected to be arson.
- The Standard Fire Insurance Company paid the policy proceeds of $110,000 directly to Bobbie Kimball's attorney.
- Upon receiving the funds, Bobbie Kimball absconded with the money.
Procedural Posture:
- Bobbie Clark Kimball sued The Standard Fire Insurance Company in the Ninth Judicial District Court for the Parish of Rapides, Louisiana (a state trial court) to collect insurance proceeds.
- Michael H. Davis, the provisional administrator for the Succession of Guy Kimball, filed an intervention in the lawsuit on behalf of the succession.
- Following a bench trial on the intervention claim, the trial court found for Kimball and dismissed the intervenor's suit.
- The intervenor, the Succession of Guy Kimball, appealed the trial court's judgment to the Court of Appeal of Louisiana, Third Circuit.
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Issue:
Does the succession of a deceased co-owner have a right to a portion of fire insurance proceeds when the surviving co-owner and usufructuary was the sole named insured on the policy?
Opinions:
Majority - Laborde, J.
No. The succession of the deceased co-owner is not entitled to a portion of the fire insurance proceeds. A fire insurance policy is a personal contract between the insurer and the insured, and when a co-owner separately insures only their own interest, the proceeds belong exclusively to that party. The court reasoned that Mrs. Kimball, the sole named insured, demonstrated an unequivocal intent not to insure the interests of the other co-owners (her children, represented by the succession). The court cited Louisiana Civil Code Article 617, which explicitly states, 'If the usufructuary or the naked owner has separately insured his interest only, the proceeds belong to the insured party.' Therefore, even though the children had an insurable interest as co-owners, that interest was not actually insured by this policy, and the proceeds rightfully belong to Mrs. Kimball alone.
Analysis:
This decision solidifies the legal principle that a contract of insurance is personal to the named insured, rather than an interest that runs with the property itself. It clarifies the application of Louisiana's co-ownership and usufruct laws to insurance claims, establishing that a co-owner cannot recover under another co-owner's policy unless they are also a named insured or the policy was clearly intended to cover their interest. This precedent compels co-owners, such as heirs who are naked owners, to take affirmative steps to protect their property interests by either ensuring they are named on an existing policy or by procuring their own separate insurance coverage.
