In some cases, property carriers can recoup the amounts they paid to mortgagees from their own insureds, the mortgagors. “Stated another way, ‘[W]hen an insurer pays a mortgagee for loss from an insured’s arson, the property insurer is entitled to recoupment and restitution of that amount from the insured.’” Allstate Indem. Co. v. Dixon, No. 6:14-cv-03489-MDH, 2018 WL 11427943, at *7 (W.D. Mo. March 30, 2018), aff’d with opinion, 932 F.3d 696 (8 th Cir. 2019).
When one insured’s act destructive of coverage binds its co-insureds, there is simply no insurance coverage available for damage or loss that results from the destructive act. This principle appears broad enough to apply even in cases involving destructive acts besides setting fires. “Where an insurer makes mortgage payments to a mortgagee on the insured’s behalf because it is required to do so by the policy, and a determination is later made that the insured was not entitled to coverage under the policy, the insured has no right to benefit from the payment.” Allstate v. Dixon, 2018 WL 11427943, at *8.
In this case, a jury previously found that a destructive fire was set by or at the direction of a husband. The Court ruled under Missouri law that this act of the husband bound his co-insured wife under their Allstate property insurance policy. Accordingly, the Court granted the carrier’s “motion to recoup the mortgage payment made to the [mortgagees by the mortgagors-insureds] in the amount of $107,526.29,” among other things. Allstate v. Dixon, 2018 WL 11427943, at *9, aff’d, 932 F.3d at 703.
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