Assureds, Loss Payees, and Severability of Insurance Contracts

Transamerica Leasing, Inc. v. Institute of London Underwriters, 1998 WL 310662 (S.D Fla. 5/6/98). ASSUREDS, LOSS PAYEES, AND SEVERABILITY OF INSURANCE CONTRACTS- Plaintiff was a lessor of ocean cargo containers and sued the lessee's insurance company for failure to pay a claim. Lessee's insurance policy simultaneously listed "leasing companies" as assureds and Plaintiff as a loss payee. According to the court, an assured party (or coinsured) has all the rights afforded to the named insured and can recover on the policy under its own right. A loss payee, on the other hand, can only recover to the extent the named insured can recover. Since the policy in this case may have been void with respect to the insured, the above characterization became crucial. Defendant argued that Plaintiff was named as a loss payee and therefore could not be an assured. However, the court noted that the contract included "leasing companies" as assureds and that Plaintiff was indisputably a leasing company. In addition, a party can be both a loss payee and an assured. Since Defendant only argued that Plaintiff was a loss payee and never offered any evidence that Plaintiff was not also an assured, Plaintiff was entitled to summary judgment on this issue. Repeat after me: "ADDITIONAL INSURED."