Lost paychecks should be included in the paychecks. Depending on the language of the judgment requiring restitution, that may be the only right the loser has.
The recent federal election from Alabama inspired what I did 12 years ago Forfeited Shares and Fixed Shares of the Mortgagee: Know the Basic Law and the Difference. The court ruled in favor of the insurance company and stated the following:
In insurance policies, loss payments add parties, ‘Loss Payers’, excluding the insured to receive payment from the insurer in case of loss of property. There are two types of things that are subject to restitution under Alabama law: the minimum interest that must be paid and the fixed judgment of the debt… The Loss Payee ‘is entitled to payment only if the debt reaches the insurer.’ The second type of Loss Payment, the fixed part of the liability, creates a separate relationship between the Loss Payer and the insurer, meaning that the Loss Payer can be paid by the insurer even if the insured is not paid by the insurer….they are distinguished based on the language of the policy….
The standard mortgage clause is written with specific language in the insurance policy creating a separate contract between the Loss Payee and the insured….At Norwest, the insurer says, ‘If we refuse [the homeowner/insured’s] claim, that refusal will not serve as a valid obligation of the borrower [i.e. Loss Payee]…’…. There, the court held that the language of the policy created a default judgment because it reflected a separate relationship between the Loss Payer and the insurer. Id. at 17. See also I am. Security Protection. Co. v. Fairfield Shopping Ct., LLCNo. 2:12 CV- 02415-SGC, 2016 WL 4732581, at *2 (ND Ala., Sept. 12, 2016) (applying Alabama law) (finding a default judgment when the contract stated that ‘the creditor still has the right loss of payee’ despite actions taken by the creditor to prevent repayment)…
Here, Section B of the Decision is the easiest part to provide because it shows that the Losing Payor is relying on the insurance claim and because it does not include the clear language of a separate agreement between the Losing Payor and the insurer. Clause B states that the insured ‘shall pay interest for any loss or damage together [the Named Insured] and the Lost Payer.’ The word ‘jointly’ indicates that the Loss Payee will be paid only if the insurance is also paid. In addition, Section B does not include language in the separate agreement that indicates a permanent mortgage clause. This contrasts with the language of the next clause, Clause C, which says ‘if we refuse [insured’s] need a reason [insured’s] does… The Losing Payee shall retain the right to receive payment after the loss.’ The clear language of the separate agreement in Section C indicates that the parties want a simple loss to be paid under section B and a fixed interest award under section C. Because the language of the agreement indicates that the Loss Payer depends on the policyholder’s wishes and because it does not. make it clear that a separate agreement is made between the Loss Payer and the Insurer, paragraph B is the simplest part that can be provided.
Under a simple claim that must be paid, the loser is named on the payment only if the named insured has the right to pay. In this case of Alabama,1 the insured did not provide proof of loss, provide the requested documents, or attend the requested examination under oath. As a result, the court ruled in favor of the insurer, stating that:
According to the evidence provided by Nautilus, the Insured failed to comply with the provisions of the Policy. As a national policy, Nautilus’ policy mentions ‘Service in the event of loss or damage’, which includes providing all information about the damage, submitting an affidavit of loss, and, at the request of Nautilus, submitting for inspection. Nautilus has repeatedly notified the Insured of these services by including them in correspondence. Pursuant to the Policy, at the beginning of 2015, Nautilus requested to provide an affidavit of loss, other documents, and an assessment of the Insurer… Nautilus’ evidence shows that the Insurer did not provide an affidavit of loss or other documents that were requested. Furthermore, after several renewals, the Insurer stopped and did not provide the test. Because the Policy established a precedent and because Nautilus’ evidence shows that the Insured failed to fulfill the obligations, Nautilus is not obligated to reimburse the Insured for the loss of property.
Since the insured could not collect, neither could the loss payer.
Here, the owner of the property is listed as the payee. The lessee himself was named the insured. I want property owners to get policies that insure them to protect their interests. Indeed, a creditor can have all kinds of reasons for not following through after a loss. Keeping the insurance coverage separate and not dependent on the homeowner is something that insurers should discuss with homeowners.
Thought of the Day
Where power is increased, Propertalay of any kind is respected. No man is safe in his thoughts, his personality, his powers, or his possessions.
1 Lee Investments LLC v. Nautilus Ins. Co., on 7:20-00903 (WD Rev. Aug. 1, 2022).