Eagle Sales Company owns a warehouse, subject to a mortgage obtained from First

Question

Eagle Sales Company owns a warehouse, subject to a mortgage obtained from First National Bank. Separately, Eagle and First National obtain insurance policies from Good Hands Insurance, Inc., to cover the warehouse. Later, Eagle sells the property to Interstate Distribution Corporation but keeps the insurance policy. First National agrees to act as Interstate's mortgagee, and Interstate obtains an insurance policy from Good Hands to cover the property. A fire totally destroys the warehouse.

Who can recover an amount for its loss?

Explanation / Answer

This does not happen. Usually there is only one policy of insurance on the building. An insurance company would never issue multiple policies for the same thing for fear that something like this would happen and they would be obligated to pay out multiple claimants for the same injury. But for the sake of argument, first national and interstate could recover for the loss of the building.

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