So this is kind of a tragic insurance dispute decided in Delaware.
https://courts.delaware.gov/Opinions/Download.aspx?id=366020
Plaintiff is a registered nurse and immigrant from Cameroon, who learned about flipping houses as a side job. Her instructors recommended that properties be purchased and held in an LLC, so that's what she did, w/o apparently understanding the legal implications
She then took out insurance on one house, and though the LLC was the owner, she represented she herself was the owner.
Fire, house destroyed, insurer refuses to pay, magistrate holds in favor of insurer.
As a private occupant she could have gotten insurance for contents in the house, but that wouldn't cover the house itself.
If you rent, and have contents insurance, and your home burns down, it's the owner's insurance that covers the property loss, not you. Same basic thing.
The LLC is the entity that owns, and needs to get insurance on the property itself, not the occupant.
Her LLC is now out the money on the lost propery but it can declare bankruptcy and walk away.
@maya_b She wasn't the occupant. the point was to flip it
Of course, but that doesnt mean she can insure someone else's (the LLC's) property. If the property owner (the LLC) doesn't have insurance on the property, the propery is uninsured.
It doesn't matter what her intent was, she bought the insurance from the wrong entity (herself) instead of through the LLC.
And even without reading the policy, I'm 99.999% sure the insurance company is covered financially in this situation.
@maya_b @annmlipton It does seem strange that it was legal for the insurance company to take her money and write her a policy that they could never pay out on.
If they could determine she wasn't the owner at time of claim, couldn't they make that determination at time of signing?
