MOSELY V. BALBOA INSURANCE | LENDER PLACED (FORCED PLACED) INSURANCE | HOMEOWNER'S RIGHT TO SUE INSURER ABSENT PRIVITY

In Mosely v. Balboa Insurance (WDNC, November 5, 2013), the federal court addressed whether a homeowner can sue the insurer for breach of contract and damages arising from damage to the home, where the policy was issued to a lender, as a "lender placed" policy. The homeowner claimed that the insurer had not paid the full amounto f the claim. (The insurer made an initial payment to the lender (Countrywide), and the lender sent payment to the homeowner. The homeowner thereafter claimed additional water intrusion and mold damage.) The homeowner sued the insurer. The insurer moved to dismiss, arguing that the homeowner was not the "named insured" and was not in privity of contract with the insurer, and was not an intended third-party beneficiary. The court essentially concluded that the policy made sufficient reference to the homeowner, such that "the actual language of the insurance policy and the surrounding circumstances confer a legally enforceable benefit to the Moselys as intended third party beneficiaries."

This case is somewhat interesting because it addresses situations in which persons other than the named insured (or additional insureds) have rights under an insurance policy.

John Kirby has represented many parties in insurance cases, including those involving the issues of privity of contract.