Paraphrase creditor rights, remedies, and insurance as a component of Essay - 1

Paraphrase creditor rights, remedies, and insurance as a component of risk management - Essay Example The scenario given involves Eagle Sales Company who owned a warehouse after obtaining a mortgage from First National Bank. The two companies obtained insurance policies separately from the Good Hands Insurance Company to insure the warehouse. Later on, Eagle Inc. sold the warehouse to Interstate Distribution Company but kept the insurance policy. Furthermore, the bank agreed to be Interstate’s mortgagee, and Interstate also obtained an insurance policy from Good Hands Inc. to cover the warehouse. If a fire destroys the property, the companies that will recover an amount of the loss are Interstate and the mortgagee. Eagle Sales Company cannot have any share because they have no insurable interest for the warehouse. This is because the only person who should recover from the loss is the owner of the property (Miller, 2011). Eagle cannot recover from the loss even if they had retained the insurance policy of the warehouse since, they do not have the insurable interest of the property. For instance, Eagle Inc. can only be entitled to a refund of premiums paid to the Good Hands Insurance Company. Insurance interests are not dependent on the premium payers of the insurance policy. Therefore, Good Hands risk was under the insurance policy that it sold to Interstate Distribution Corporation. This case is also unbelievable based on the fact that there is only a single insurance policy to any property insured. Insurance companies cannot offer multiple insurance policies on the same property. If an insurance company does this, then it will have to compensate the multiple claimants who had insurance policies for the property (Cheeseman, 2009). In this scenario, First National Bank and Interstate Distribution Company are the only claimants who can claim compensation for the loss of property. The information given clearly shows that the mortgagee who is represented by the First National Bank and the Interstate Distribution Company sites them