Suter v. Union Surety- Insurable Interest

51 OG 1905

Facts:

>  Suter, the managing partner of Morcoin Co., insured two juke boxes with Union Surety for P4,000. 

>  Subsequently, the two juke boxes were destroyed by fire.

>  Suter now claims from Union Surety, the latter denying the claims on the grounds that:

o    The properties were allegedly overvalued, it having been proven that the juke boxes cost only P774.00

o    Suter had no insurable interest since the properties insured belong to Morcoin Co.

Issues and Resolutions:

(1) Whether or not the juke boxes were overvalued.

No.   While acquisition cost is only P774.00, this does not include taxes, freight insurance, shipping cost, and other improvements made thereon.  The value of the property is determine at the time it was insured and not the time it was acquired.

(2) Whether or not Suter had insurable interest.

YES, Suter had insurable interest.  The test for insurable interest in property is whether or not the insured will benefit in the property’s reservation or continued existence, or suffer a direct pecuniary loss in its destruction.  Suter, being the managing partner will clearly benefit in the juke boxes’ preservation and would also be affected by its destruction.