The mortgagor homeowners survived a motion to dismiss their claim for coverageunder the lender's property policy after their home suffered hurricane damage. Gary v. Am. Sec. Ins. Co., 2021 U.S. Dist. LEXIS 100010 (W.D. La. May 26, 2021).      Plaintiffs' home was mortgaged by Pennymac Loan Services, LLC. Pennymac held a property policy with American Security to insure its interest in the home. Plaintiffs were not named as insureds or additional insureds under the policy. Plaintiffs were identified as the borrowers under the policy on the Declarations page.      After hurricane damage to their home, plaintiffs sued American Security for coverage for the losses. American Security moved to dismiss, arguing plaintiffs were neither additional insureds nor third party beneficiaries. Lender-placed policies were designed to insure the lender's collateral whenever the borrower failed to maintain adequate insurance. The Loss Payment provisions in the policy stated that "Loss will be made payable to the named insured [Pennymac]. No coverage will be available to any mortgagee other than that shown as the named insured on the Declarations."      Plaintiffs argued that the policy imposed certain duties on them, including cooperating with American Security in any investigation of a claim. After an adjuster inspected the property, an agent of American Security mailed the plaintiffs a letter explaining American Security's adjustment of the loss and included a net payment for loss in the amount of $240.76. The loss adjustment report listed the plaintiffs as the insured.     American Security argued that even though the policy obllgated the plaintiffs to cooperate, the Payment of Loss section clearly named Pennymac as the beneficiary of the policy.      Nevertheless, the court noted that the case ws in its infancy and wanted to allow plaintiffs an opportunity to amend. Therefore, the motion to dismiss was denied.

from Insurance Law Hawaii https://ift.tt/3hAtO5s