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Teague-Strebeck Motors Inc. v. Chrysler Insurance Co.3/8/1999
not necessary to buy a separate workers' compensation insurance policy." Id. at 84, 868 P.2d at 1309. When an employee was later injured on the job, Charter Services found itself liable under the Workers' Compensation Act for the employee's injuries. Charter Services did not contend that the insurance company had failed to pay under a workers' compensation policy. Indeed, it does not appear that the insurer even offered workers' compensation policies. The award to Charter Services was simply for damages arising from the misrepresentation that it did not need workers' compensation insurance coverage. See id. at 85, 868 P.2d at 1310.
{16} In the case before us, in contrast, the claim of Mills-Strebeck is that it should have been treated as an additional insured under the insurance policy, even though the policy in existence at the time of the fire did not name Mills-Strebeck as a principal or additional insured. The damages awarded by the district court to Mills-Strebeck were calculated as if it was covered under the policy. The court's Conclusion of Law 13 states:
"The representations of [Rudel] regarding coverage, and the absence of conditions on the same, had the legal effect of amending the policy terms. [Mills-Strebeck] should have the benefit of the maximum coverages for any business locations specified in the Summary of Protection . . . on the insurance policy." (Emphasis added.)
In other words, the district court treated Mills- Strebeck as if it were covered under the insurance policy. Because Chrysler has not challenged on appeal the factual or legal basis of Conclusion 13, we need not explore the various legal theories under which the damages might have been awarded. See, e.g., Fryar v. Employers Ins. of Wausau, 94 N.M. 77, 81, 607 P.2d 615, 619 (1980) (apparently applying promissory estoppel to modify insurance contract based on agent's misrepresentations concerning policy provisions); Restatement (Second) Torts § 549(2) (1977) (victim of intentional misrepresentation in a business transaction may be entitled to benefit- of-the-bargain damages); First Interstate Bank of Gallup v. Foutz, 107 N.M. 749, 751-52, 764 P.2d 1307, 1309-10 (1988) (damages for negligent misrepresentation are limited to out-of-pocket losses rather than benefit of the bargain). Conclusion 13 distinguishes this case from Charter Services, in which there was no ruling that the insurance company was obligated by the terms of a policy. Given that Conclusion, Chrysler owed Mills-Strebeck all duties owed to a business covered by the policy. Those duties included the duty of good faith in handling claims. See Dairyland Ins. Co. v. Herman, 1998-NMSC-005, 12, 124 N.M. 624, 954 P.2d 56. Thus, the award of bad faith damages must be sustained. The law set forth in Charter Services does not preclude the award in this case.
IV. INSURABLE INTEREST
{17} To recover on an insurance policy for property damage, the insured must have an insurable interest in the property at the time of the damage. See NMSA 1978, § 59A-18-6 (1984). Chrysler's principal contentions on appeal relate to Mills-Strebeck's insurable interest in the dealership property for the purpose of collecting on the fire insurance. (Chrysler does not dispute that Mills-Strebeck had a sufficient connection to the property to obtain coverage for liability insurance. See Robert E. Keeton and Alan I. Widiss, Insurance Law (Student Edition) § 3.4, at 166 (2d ed. 1988) (Keeton & Widiss) ("For purposes of liability insurance, the existence of an insurable interest should be determined on the basis of whether the insured may be liable. . . .")). First, Chrysler asserts that Mills-Strebeck had no insurable interest
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