Dorothy is a sole proprietor who recently incorporated her business in order to take the benefits of limited liability. As part of this change, she transferred all her business assets over to her corporation Dorothy Ltd. Unfortunately, she forgot to change her insurance policies naming the company as the new insured. The property remains insured in Dorothy’s name. Soon after the transfer, there was a break-in at Dorothy Ltd.’s corporate offices and much of the company’s expensive computer equipment was stolen. Dorothy made a claim on her policy but the insurance company took the position that she did not have an insurable interest in the corporate property.
Explain why the insurance company refused Dorothy’s claim. What can she do now? What arguments can she make in support of her claim? What practical advice would Dorothy now give to other small business owners?