## Facts

- Ida Mae Hunter bought a State Farm homeowner’s policy in 1970 covering her residence.
- In 1982, after a heart attack and hospitalization, Hunter executed a warranty deed transferring legal title to her children; she claimed she believed she retained a life estate and did not intend to give up the beneficial interest.
- After discharge, Hunter did not move back into the home; she lived with a daughter briefly and then in an apartment.
- In 1984, Hunter informed State Farm in writing that she had moved, but she continued paying the homeowner’s premiums and the property taxes.
- Hunter’s grandson lived in and maintained the house; most of Hunter’s personal property remained there.
- In February 1985, Hunter’s son submitted a theft claim under the policy for the house; State Farm paid the claim.
- In October 1985, the house was destroyed by fire; Hunter claimed under the policy.
- State Farm denied the fire claim, asserting Hunter lacked an insurable interest because she had conveyed title to her children.
- Hunter asserted she had an insurable interest based on her economic stake, intent to return, and an alleged constructive-trust or equitable arrangement; the children later reconveyed title to her.
- The trial court granted summary judgment for State Farm and its agent on the ground that Hunter had no insurable interest at the time of the fire.

## Issues

1. Whether summary judgment was proper on the ground that Hunter lacked an insurable interest in the dwelling at the time of the fire because she had previously deeded legal title to her children.
2. Whether evidence of continued economic stake and asserted equitable interests created a triable fact question on insurable interest under Alabama law.

## Decision

- The Supreme Court of Alabama reversed the summary judgment and remanded.
- The court held Alabama’s definition of insurable interest is not confined to legal title and can include an economic stake in preservation of the property.
- Viewing the evidence favorably to Hunter, a reasonable jury could find she would suffer pecuniary loss from the destruction of the home.
- Evidence supporting a jury question included her continued payment of premiums and taxes, her personal property remaining in the home, her asserted intent to return, the grandson’s occupancy and maintenance, the later reconveyance, and State Farm’s prior payment of a theft claim after the deed transfer.

## Legal Principles

- An insurable interest exists if the insured would derive pecuniary benefit from preservation of the property or suffer pecuniary loss from its destruction.
- Legal title is not determinative; an insurable interest may exist without legal or equitable title where there is a real economic interest in the property.
- Insurable-interest determinations are fact-dependent and may be inappropriate for summary judgment when record evidence permits competing inferences.
- Allegations and evidence suggesting an equitable interest (including constructive-trust theories or retained beneficial ownership) can contribute to a triable issue on insurable interest.

## Conclusion

Because the record contained evidence from which a jury could find Hunter had an insurable interest in the dwelling despite the prior deed transfer, the Alabama Supreme Court reversed the summary judgment for the insurer and remanded for further proceedings.


Hunter v. State Farm Fire & Cas. Co., 543 So. 2d 679 (Ala. 1989)