The U.S. Eleventh Circuit Court of Appeals held that Florida law limits an insured’s recovery under a commercial property policy to its actual insurable interest and not the full amount of property damage when the insured does not own the property. Banta Properties, Inc. v. Arch Specialty Ins. Co., 2014 WL 274478 (11th Cir. Jan. 24, 2014). 

The insured purchased commercial property insurance for three apartment complexes it managed in exchange for a percentage of the gross income. The complexes were damaged and suffered lost rents. After settling its property damage claims with the primary insurer for the policy limit, the insured filed a property damage claim with the excess insurer. The parties were unable to resolve the claim, and the insured sued the excess insurer. After trial, the jury found that the insured had a $5 million insurable interest in the property and had suffered $4 million in damage to that interest. The excess insurer moved for judgment as a matter of law, but the district court denied the motion. The excess insurer appealed. 

On appeal, the Eleventh Circuit reversed and held that Florida’s insurable interest statute precludes an insured’s recovery beyond the revenue stream it derives from managing the properties. The court found that, under Florida law, a non-owner’s insurable interest in property is limited to the actual value of the potential loss one might suffer from damage to the property. The only right the insured had in the insured property at the time of the loss was the contractual right to receive a percentage of gross income in exchange for its services as property manager. Thus, the court concluded that the sole injury the insured suffered to its insurable interest was its share of the percentage of lost rent.