The “Double Recovery Rule”

Originally published by Jason Cieri.

Prior to attending law school, I obtained my life insurance license. One of the main principles they teach you during your class is that purchasing property insurance is not a way to make money (at least from the policyholder’s perspective). Insurance is purchased to make you whole again if you experience a loss. No matter how many insurance policies you have for your property, you cannot recover more than the market value of your property. Such was the situation in the recent appellate decision in Pye v. Fidelity National Property and Casualty Insurance Company.1
Jeffrey and Theresa Pye owned a two-unit residential building in Galveston, Texas. In 2007, an appraiser estimated the market value to be $195,000. The building was insured against floods by Fidelity under the National Flood Insurance Program for $205,400 and an additional %50,000 for contents coverage. They also had a policy with Texas Windstorm Insurance Association that covered damages related to wind.

Hurricane…

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