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7^th Circuit Court of Appeals

Case Name: William Werner v. Auto-Owners Insurance Company

Case No.: 21-3116

Officials: Hamilton, Kirsch, and Jackson-Akiwumi, Circuit Judges.

Focus: Insurance

William Werner, the plaintiff, owned a home in Springfield, Illinois, which caught fire in 2017 while it was in foreclosure. Werner held an insurance policy with Auto-Owners Insurance Company. Following the fire, Werner filed a claim seeking reimbursement for the policy limit covering the home and two additional coverages, totaling slightly over $190,000. Auto-Owners rejected Werner’s claim for the entire replacement value of the home, arguing that he no longer had any insurable interest in the property’s full value after the foreclosure sale and expiration of his redemption rights.

Initially heard in the Central District of Illinois, the court ruled in favor of Auto-Owners. It determined that at the time of the fire, Werner’s only remaining insurable interest in the property was based on his limited right, under Illinois law, to occupy the home until 30 days after the confirmation of the judicial sale. The court awarded Werner the rental value for this temporary right, totaling just under $4,000.

The Seventh Circuit upheld the district court’s ruling. The appellate court agreed with the interpretation of Illinois insurance law by the lower court, affirming that Werner’s insurable interest when the fire occurred was confined to the value of his temporary right of occupancy. Although Werner still legally owned the property at the time of the fire, his lack of rights to redeem it from foreclosure or retain ownership meant his insurable interest did not encompass the property’s full value.

Affirmed.

Decided 07/09/24

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