Andre insured his automobile against theft under a policy of insurance. Shortly after he had insured the vehicle, he found himself short of cash, and offered to sell the vehicle to his friend for $500 if his friend would dismantle it for parts. Andre did not tell his friend that he intended to claim that the car had been stolen. His friend bought the car for $500 and dismantled it. If the insurer, unaware of the fraud, paid Andre for the claimed loss of his automobile, the insurer is entitled to a transfer of the title to the vehicle.

Question

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When an insurance company pays out a claim for the loss of a vehicle, they are typically entitled to take possession of the vehicle if it is later recovered. In this case, despite the fraudulent circumstances, once the insurer compensates Andre for the claimed loss, they would have the right to the title of the vehicle, as they have effectively 'bought' the remains of the vehicle through the insurance claim payout.

Andre Insured His Automobile Against Theft Under a Policy of Insurance