## Facts

- Mutual Savings Life Insurance Company issued two “Twenty Pay Life Insurance” policies on William L. Noah’s life, naming his brother, Donald R. Noah, as beneficiary.
- The first life policy provided a $1,500 ordinary death benefit and a $3,000 accidental death benefit; the second provided a $1,000 ordinary death benefit and a $2,000 accidental death benefit.
- Mutual Savings also issued a burial policy promising funeral services and specified items if death occurred in Alabama within 35 miles of an authorized funeral director.
- William died by accidental drowning in or near Galveston, Texas, while the policies were in force.
- Donald made claims under all three policies; Mutual Savings refused to pay the life-policy death and accidental death benefits and made only a partial payment under the burial policy.
- Donald filed an equity action for declaratory judgment seeking construction of the policies and a declaration of Mutual Savings’ obligations.
- The trial court declared Mutual Savings obligated to pay the life-policy death and accidental death benefits and the remaining burial-policy benefits; Mutual Savings appealed, arguing chiefly that Donald lacked an insurable interest in William’s life and that policy provisions limited liability.

## Issues

1. Whether a brother-beneficiary has an insurable interest in the insured brother’s life sufficient to validate life insurance policies issued with the beneficiary named.
2. Whether the burial policy was subject to the same insurable-interest invalidity argument as the life policies.
3. Whether policy language (including territorial limitations and accidental death coverage) should be construed to limit or require payment under the circumstances of death.

## Decision

- The Alabama Supreme Court affirmed the declaratory judgment requiring payment under the two life policies, including accidental death (double indemnity) benefits for the drowning.
- The Court held Donald had an insurable interest in William’s life based on the sibling relationship, notwithstanding evidence the brothers were not especially close and absent proof of financial dependence.
- The Court treated the burial policy as a distinct type of contract and rejected the insurer’s attempt to defeat it on insurable-interest grounds in the same manner as ordinary life insurance.
- The Court construed ambiguous insurance provisions against Mutual Savings as drafter and in favor of coverage, while crediting any partial burial-policy payment already made.

## Legal Principles

- A life insurance policy generally requires an insurable interest to avoid being an unlawful wagering contract.
- Close family relationships may supply an insurable interest based on natural affection and a reasonable expectation of benefit from continued life or loss from death; a sibling relationship can be sufficient without proof of present financial dependence.
- Burial insurance, structured primarily as an undertaking to provide funeral services and goods, may be treated differently from ordinary life insurance for insurable-interest challenges.
- Ambiguous insurance policy language is construed against the insurer and in favor of coverage; exclusions or limitations must be clear to defeat otherwise applicable benefits.

## Conclusion

The court held that a brother may have an insurable interest in a sibling’s life sufficient to support life insurance payable to the brother-beneficiary, enforced accidental death benefits for death by drowning, and declined to invalidate a burial-policy claim on the same insurable-interest theory while construing unclear terms against the insurer.


Mut. Sav. Life Ins. Co. v. Noah, 282 So. 2d 271 (Ala. 1973)