Engagement Ring – Claims Magazine
THERE IS MORE CURRENT INFORMATION ON THIS TOPIC IN Q&A 166 – ENGAGEMENT RING COVERAGE.
QUESTION:
The named insured purchased a $5000 engagement ring and scheduled it under an ISO HO 04 61 04 91 Scheduled Personal Property Endorsement attached to his ISO HO 00 03 04 91 Homeowners policy.
He proposed to his girl friend and gave her the ring. His fiancee had no insurance of her own. Months later, before the couple cohabited or married, the ring was stolen from the fiancee's possession. The insured files a claim for the value of the ring under his policy. Is the ring covered?
ANALYSIS:
The ring is probably not covered because the named insured lacked an insurable interest in it at the time of the loss. While the Scheduled Personal Property Endorsement does not itself contain a specific insurable interest requirement, the introductory paragraph of the endorsement says that the endorsement's coverage is subject to the Section I – Conditions. The first of the Section I – Conditions of the underlying Homeowners form states that the company will not be liable to the insured for more than the amount of the insured's interest in the property at the time of loss. "But," you might say, "the named insured paid for the ring with his own funds and specifically insured it under his policy. Why shouldn't the named insured be allowed to recover for loss of the ring?"
The general legal rule, however, is that gifts given in contemplation of marriage, such as the giving of an engagement ring by a man to a woman upon her acceptance of his proposal, are completed gifts, at least as long as the donee-recipient has not reneged on the promise of marriage. Once a completed gift of property is made, the donor or gift-giver loses all property interest in the gift. The rule seems to be the same as to insurable interest. In Ludeau v. Phoenix Ins. Co., 204 S.W.2d 1008 (Tex. App. 1947), a man became engaged and gave an engagement ring to his fiancee. It was later stolen from her possession. Shortly thereafter, the insured renounced his promise to marry the girl, but she remained ready and willing to marry him. The court held that the title to the ring passed to the woman at the time it was given to her and that the insured thus had no insurable interest in the ring at the time of the theft. The Ludeau court relied on the following reasoning from the non-insurance case of Urbanus v. Burns, 20 N.E.2d 869 (Ill. App. 1939): At the time the articles of jewelry were presented, both parties knew that, according to the course of nature, either of them might die before the marriage was consummated. Had Loretta lived and had plaintiff declined to marry her, he could not recover the jewelry or the value thereof. Had he died before they became married, his personal representative could not recover the jewelry for the benefit of his estate. At the time of her death, Loretta had a right to the possession of the jewelry as against all persons. She did not at anytime break the contract to marry plaintiff, or refuse to marry him. She was the owner of the jewelry at the time of her death, and she did not break the marriage troth. Hence, plaintiff had no right to claim recovery on the same as against her brother and sisters, or personal representatives.
Ludeau was relied on in Moss v. Union Mut. Ins. Co., 161 N.W.2d 158 (Mich. App. 1968), which held that the insured father could not recover under a scheduled property floater for a scheduled diamond ring which he gave to his son, who in turn gave it as an engagement ring to his fiancee. After the son and his fiancee got married, the wife discovered a large crack in the diamond.
The court held that the insured father could not recover for the loss to the ring since at the time of loss he had no insurable interest in it. The insured father no longer had any title to the ring, nor any reversionary, security, or other interest in it which might subject him to direct pecuniary loss by the ring's damage or destruction.
While these decisions are old, no contrary insurance decisions have been located, and the basic requirement of insurable interest at the time of loss as a condition precedent to recovery under property insurance still seems to be settled law.
However, the existence of an insurable interest at the time of loss may be expected to follow the law of the property rights of givers of gifts in contemplation of marriage. Thus, under other circumstances, the named insured might be able to recover for the ring. Most decisions have held that where the donee-recipient breaks the engagement without legal justification, the donor or gift-giver is entitled to the return of engagement presents, or their value. And if the parties call off the engagement by mutual consent, then most courts have held that, in the absence of an agreement to the contrary, gifts given in contemplation of marriage must be returned by each party to the other. But, if the donor or gift-giver calls off the engagement without justification, courts have generally held that the donor cannot recover the gifts given. Be aware, however, of the possible effect of state statutes designed to preclude actions for breach of promise to marry (so-called "heart balm" acts). In some states these acts have been held to preclude actions for recovery of engagement presents. Although no cases dealing with the effect of such statutes on property insurance recovery have been located, it is possible that a court might interpret such astatute as eliminating the donor's insurable interest in an engagement ring. See 38 Am.Jur.2d Gifts secs. 83 – 86.
