Insurable interest
Jeff had an insurable interest in the building at the time of the loss. Jeff owns the building and stores its inventory as well as operating a restaurant in the building. When fire destroyed the building, Jeff suffers a financial loss including the loss of revenue from the restaurant business. Therefore, he has an insurable interest in the building.
Richard does not have an insurable interest in the building at the time of the loss. A person can only have an insurable interest in a property if the loss or damage to the property results in a financial loss to the person (Beatty, Samuelson and Beatty 537). Richard had already sold the building to Jeff and will not suffer any financial loss.
Gateway Bank has an insurable interest in the building since it stands to suffer a financial loss. This is because Jeff financed the purchase of the building through a loan from the bank and the bank and the bank held a mortgage on the building. It is likely that Jeff will be unable to repay the loan, and the bank may not recover much since the building is destroyed.
Transferring insurance policy
Richard cannot validly transfer his property insurance policy to Jeff. Insurance is a personal contract hence, it cannot be transferred without involving the insurance company even if the property insured is the same.
Material concealment
The insurer could deny coverage for the damage since there is a material concealment. An insurer rejects a claim on grounds of material concealment if it can be proved that the insured knew that the fact was important and that the insured concealed the fact to defraud the insurer. In this case, Jeff knew that the fact the he was going to operate a restaurant in the building was critical to the insurance contract. Furthermore, he concealed the fact to avoid paying higher premiums. This amounts to fraud.
Subrogation
In this case, the insurance company will pay the whole amount of claim to Jeff then collect payment from the electrician’s insurer. The fire was caused by a mistake of the electrician. Some professionals take insurance to protect them from professional liability. Jeff’s insurer will collect money from the electrician’s insurer. Jeff must be informed of the process.
Scott is eligible to establish and deduct contributions to a traditional IRA. The regulations for traditional IRA provide that where one spouse is covered by the employer’s plan, and the other one is not covered, the contribution is fully deductible if the joint modified adjusted gross income is less than $169,000. Scott meets the requirements.
Allison is also eligible to establish and fully deduct contributions since she meets the requirements. She is covered under the employer’s plan while the husband isn’t hence contributions are fully deductible if the joint Modified Adjusted Gross Income is $92,000. The MAGI, in this case, is only $65,000.
Either Scott, Allison or both can establish a Roth IRA. According to 2012 limits, full contributions can be made to Roth IRA if the combined modified adjusted gross income is less than $173,000. In this case, the combined modified adjusted gross income is $130,000, less than the limit.
According to the 2012 limits, the limit for married couples filing joint returns should be a combined modified adjusted gross income of less than $92,000 (Rothira.com). For any amount above $92,000, the deduction is phased out. In this case, the MAGI is more than $92,000 hence a tax-deductible contribution to a traditional IRA is not possible.
Withdrawals from Roth IRA are not taxed so long as the Roth IRA has been open for at least five years. This is unlike withdrawals from a traditional IRA, which are taxed. Roth IRA is also more flexible than the traditional IRA since it allows an individual to withdraw principal contributions tax-free.
Works cited
Rothira.com. (2016). 2012 Roth IRA Contribution Limits | RothIRA.com. [online] Available
at: http://www.rothira.com/2012-roth-ira-contribution-limits [Accessed 18 Apr. 2016].
Beatty, J., Samuelson, S. and Beatty, J. (2015). Business law and the legal environment.
Mason, Ohio: Thomson/South-Western/West.
