                       The Attorney                General of Texas
                                            July    9,    1980
MARK WHITE
Attorney General
                   Honorable Douglass Hubbard                    Opinion No. NW-208
                   Executive Director
                   The Admiral Nimitz Center                     Re: Whether a private foundation
                   Fredericksburg, Texas 78624                   may purchase insurance covering a
                                                                 state facility

                   Dear Mr. Hubbard:

                          The Nimitz Steamboat Hotel in Fredericksburg is an historic building
                   restored to its original appearance with funds donated by the Admiral
                   Nimitz Foundation, a private, non-profit corporation.      The structure is the
                   property of the State of Texas and in its restored condition is a major unit of
                   the Admiral Nimitz Center administered by the Fleet Admiral Chester W.
                   Nimitz Memorial Naval Museum Commission. See Acts 1969, 6ls.t Leg., ch. 8
                   at 19; Attorney General Opinion H-744 (1975). The restoration               was
                   accomplished with donated money after the legislature failed to appropriate
                   funds for that purpose.

                          You wish to know if the private foundation may legally purchase fire
                   insurance covering the hotel. The answer depends on whether its interest
                   therein is insurable.     A fire insurance policy issued to one without an
                   insurable interest in the subject matter is unenforceable on grounds of public
                   policy. See Hartford Fire Insurance Co. v. Evans, 255 S.W. 487 (Tex. Civ.
                   App. - Azhlo      1923, no writ).

                         It is not always necessary to prove title in an insured in order to prove
                   an insurable interest in the property. In Smith v. Eagle Star Insurance Co.,
                   370 S.W. 2d 448 (Tex. 1963), the Texas Supreme Court concluded that an
                   insurable interest in a house located on state land existed in a woman who
                   used the house as though it were her own. The court approved the rule that
                   an insurable interest exists when the assured derives pecuniary benefit or
                   advantage by the preservation and continued existence of the property or
                   would sustain pecuniary lass from its destruction, and it quoted a textual
                   source for the following:

                                  ‘An irrrurable interest      in property     does not
                              necessarily imply a property interest in, or a lien
                              upon, or possession of, the stiject        matter of the
                              insurance, and neither the title nor a beneficial
                              interest is requisite to the existence of such an
                              interest; it is sufficient that the insured is so situated
                              with reference to the property that he would be liable
                              to lass should it be injured or destroyed by the peril
                              against which it is insured.’



                                               P.   669
Honorable Douglass Hubbard - Page Two (MN-268)




See 43 Am. Jur. 2d, Insurance 5466 at 508. In Texas, a finding of pecuniary loss is not
necessary to show an insurable interest if there is proof of a pecuniary benefit or
advantage in the preservation and continued existence of the property. First Preferred
Ins. Co. v. Bell, 587 S.W. 798 (Tex. Civ. App. - Amarillo 1979, writ rePd n.r.e.l.

        We conclude that an insurable interest in the hotel exists in the foundation.   The
articles of incorporation for the corporation state:

               The foundation shall have as its principal... objective the
            support of the Fleet Admiral Chester W. Nimitz Memorial
            Naval Museum in Fredericksburg, an agency of the State of
            Texas operating under the Fleet Admiral Chester W. Nimitz
            Memorial Naval Museum Commission.

                To accomplish these objectives the corporation will . . .
            assist in restoring and maintaining the famous Nimitz Hotel as a
            part of the museum and visitor center. . . .

      The corporation   has invested a considerable sum in the hotel, routing its
donations through the state treasury.      The sums donated are earmarked by the
foundation &nor for particular expenditures, for which purchase vouchers payable to
the appropriate vendors are then issued by the comptroller.

       Should the hotel or its contents be damaged or destroyed, the corporation would
not only lose the benefit of its previous investments, but in order to accomplish its
corporate purposes would be faced with the task of restoring the building and articles
destroyed or damaged, whether they l-ad been previously purchased with money
donated by it or not.

      It is our opinion that under such circumstances the Admiral Nimitz Foundation
may legally purchase fire insurance covering the Nimitz Steamboat Hotel and its
contents.

                                     SUMMARY

                The Admiral Nimitz Foundation has an insurable interest in
            the Nimitz Steambcat Hotel in Fredericksburg, a state-owned
            structure, and may legally purchase fire insurance covering the
            hotel and its contents.
                                                                     A-l




                                               MARK      WHITE
                                               Attorney General of Texas




                                       P.   670
Honorable Douglass Hubbard - Page Three           (MW-208)




JOHN W. FAINTER, JR.
First Assistant Attorney General

TED L. HARTLEY
Executive Assistant Attorney General

Prepared by Bruce Youngblood
Assistant ~Attorney General

APPROVED:
OPINION COMMFTEE

C. Robert Heath, Chairman
Carla Cox
Susan Garrison
Rick Gilpin
Bruce Youngblood




                                       p.   671
