Jacob sold his house to Shelia for $140,000 in cash.Jacob "threw in" insurance on the house as part of the deal and did not bother telling the insurer that there was a new owner.Four months after Shelia purchased the home,a windstorm damaged the roof.Which of the following legal characteristics of insurance contracts could the insurer use to legally deny payment to Shelia for the damage to the roof?

Question

Quizplus · Accepted Answer

Insurance contracts are personal contracts, meaning they are made between the insurance company and an individual. When ownership of the insured property changes, the insurance policy does not automatically transfer to the new owner unless the insurer is notified and agrees to the change. Since Jacob did not inform the insurer about the sale of the house to Shelia, the insurer could legally deny payment for the damage because the contract was with Jacob, not Shelia.

Jacob Sold His House to Shelia for $140,000 in Cash