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Hazard Insurance-Additional Insured or Interest?

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Question: 
On a ​Deed of Trust-secured loan, hazard insurance is in the name of the le​s​see, loan is in the name of the property owner. Do we need to add the property owner as an additional insured or an additional interest?
Answer: 

It will depend on the insurance policy and most likely State insurance laws. Not having the owner of the property as a named insured on a NFIP would not be acceptable. Typically, it is not acceptable on other insurance policies also. Someone cannot insure something they do not own. While the leasee may have an additional insurable interest, normally they cannot insure a property without the joinder of the property owner. If it was allowed, the leasee could burn the building down, collect the insurance, and the building owner would be left holding the bag.

First published on 03/17/2019

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