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Property damage is one of the major sources of conflict in the realm of business, especially when it comes to discussing insurance-related issues. According to the case study, the person providing renting facilities to Jeff can be regarded as the party with insurable interest. Indeed, according to Rejda, the key principle of insurable interest presupposes that the insured must be in a position to lose financially if a covered loss occurs (Rejda 169).
Applied to the situation in question, this means that Jeff is the person, due to whom Richard incurred a property loss. One might argue that in the given situation, Jeff can also be viewed as a person with an insurable interest. Indeed, seeing how Jeff is supposed to offset the disadvantage and refurbish the room, not to mention the fact that he will have to buy the elements of the furniture that have been damaged in the fire, he can be viewed as the one with insurable interest (Rejda 188).
The Gateway Bank, in its turn, can also be considered the party that has an insurable interest in the unfortunate event of the property being damaged by the fire. Seeing how Jeff received the loan from the bank and is most likely to be unable to return it in the nearest future, the bank is currently under the threat of receiving neither the loan nor the interests back.
Speaking of Richards idea of assigning Jeff with the rights for the property in order to incur a lesser amount of losses, one must mention that the given operation would be legitimate if the insurer was aware of it. As Rejda explains, any attempt to assign a third person to the property insurance contract is only possible once the insurer has been notified and voiced their consent regarding the changes in the contract: A property insurance contract normally cannot be assigned to another party without the insurers consent (Rejda 176).
Therefore, Jeff will not be acceptable to the insurer until the latter is informed about the changes that will be made to the contract and has agreed to implement these changes. It should be noted, though, that Jeff can be assigned with the loss payment; as Rejda explains, the given procedure does not require the consent of the insurer and, therefore, can be carried out freely.
It should also be kept in mind that Jeff did not comply with one of the contract requirements; to be more exact, he did use the premises as the place for locating his business. The given deviation from the contractual obligations can be viewed as concealment by the insurer; as a result, the latter may simply refuse to provide insurance.
However, according to Rejda, it is the concealment of material facts that predetermines whether the insurer must or does not have to recognize the validity of the insurance; i.e., the insured deliberately withholds material information (Rejda 173), which is not the case with Jeffs insurance.
The fact that the fire was caused by the electrician, who failed to wire the electric outlet properly, also changes the situation greatly. Since the damage was done by the person performing the services, which had been provided by the third party, it will be reasonable to call the aforementioned party to the account (Rejda 170). Nevertheless, this detail does not make Jeff any less responsible for the concealment of the fact that he was running a business in the insured premises despite the contractual agreements.
Works Cited
Rejda, George. Risk Management and Insurance. 11th ed. New York, NY: Pearson. 2014. Print.
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