A Five Star Insurance Company
During the Covid pandemic, Mindy graciously offered the basement of her home for storage of used human hair wigs that were donated to a hesed organization. Though the wigs were old, they retained some value, and were regularly distributed to those who were unfortunately ill and could not afford to purchase a new wig. In the interim, Mindy experienced a severe fire in her home that not only burnt her valuable belongings, but also damaged a substantial number of wigs that were deposited for her safekeeping. Thankfully, Mindy was insured with a five-star insurance company that very generously evaluated each specific item damaged. The insurance company not only compensated Mindy for the value of the old wigs at the time of the fire, but rather reimbursed her with the full cost of brand-new wigs. Representatives of the organization along with Mindy approached our Bet Din inquiring as to who is entitled to the compensation forwarded for the wigs.
Is the organization entitled to the handsome sum of money or perhaps is Mindy? How should the Bet Din rule and why?
Torah Law
According to the ruling of the Shulhan Aruch, the sole recipient entitled to funds collected for damages caused to an item, is its owner. Thus, even if an owner allows his renter to lend out his item, if damages are ultimately collected from the borrower they are forwarded to the owner, not the renter. The obvious underlying reasoning for this ruling is that the owner that sustained the loss, not the renter, entitling the owner to collect payment from the borrower.
In the event the borrower provides extra monetary compensation above the cost of damage, the extra payment is split between the renter and the owner. The logic behind this ruling is that while the owner alone is entitled to recoup his loss, the additional monies do not belong to the owner any more than they belong to the renter. The renter is the party that transferred the item to the borrower. It is his involvement that enabled the additional payment from the borrower. On the other hand, the owner of the item is also entitled to a portion of the additional funds, since if not for his item, the additional payment could not have been possible. Hence, the accepted ruling is to split all extra money collected above the value of the item.
The above rules are applicable to all types of custodians, paid or unpaid, as well as to borrowers and renters. Hence, in the event an unpaid custodian transfers an item to a paid custodian, the owner alone is entitled to payment for the cost of his loss. As per any extra money collected, it is split between the owner and the unpaid custodian.
The relationship of a homeowner with an insurance policy that collects on a loss sustained to another’s merchandise found in his home, is seemingly like the relationship of an unpaid custodian that hires a paid custodian. The homeowner is safekeeping the merchandise at no char
ge and is paying for it to be insured. Accordingly, the homeowner would be required to forward the cost of damage collected from his insurance to the owner of the damaged merchandise. Any additional payment by the insurance company above the cost of damage is to be split between the homeowner and the owner of the damaged merchandise.
Contrary to the above analysis, most contemporary halachic authorities rule that the owner of an insurance policy is awarded with all monies paid to him by the insurance company. Not only is the policy holder entitled to collect all the additional funds paid by his insurance, but he is even entitled to collect for the loss of his friend’s merchandise. In their view, a homeowner with an insurance policy is viewed as an independent investor who is financially unaffiliated with any other party. Hence, he is entitled to collect from his insurance even for damages caused to the property of others. The aforementioned ruling of the Shulhan Aruch in which a renter transfers an item to a borrower differs. Since the renter is viewed as the owner’s messenger to transfer the item to the borrower, the borrower pays directly to the owner. In the instance of insurance, the item is never transferred to a third party and the homeowner is never viewed as a messenger. On the contrary, the item was stationed all along in the homeowner’s possession, and as an unpaid custodian he is absolved of payment. The fact that the homeowner owns an insurance policy is thus viewed as a private investment and is unrelated to the loss of the damaged merchandise’s owner.
Furthermore, nearly all halachic authorities agree that if the policy owner stipulated in his plan that he has the legal right to insure the “property of others” he is entitled to all money collected. Since he does not need the participation of the property owner to legally declare the loss, it is clearly viewed as an unaffiliated investment by the homeowner entitling him to all proceeds.
By rule of the Shulhan Aruch, a custodian is not responsible for the loss of money that belongs to charity. Since charity, prior to its allocation to the poor, is technically ownerless, no one party has the right to submit a claim. According to most halachic authorities even a treasurer of an organization safeguarding money or merchandise is exempt and is included in the above ruling. According to all opinions, if the treasurer is also the distributor or comptroller of the charity, he is clearly exempt of all responsibility.
Clearly, a custodian of charity is not responsible to forward insurance money he collected to reimburse an organization for its loss.
Verdict: Taking the High Road
Our Bet Din ruled in favor of Mindy and explained to her, that by law, she was entitled to all the funds she collected from her insurance for the wigs. As detailed in Torah law, the majority of halachic authorities view her insurance policy as an independent investment that entitles her to all proceeds. Furthermore, even some of the authorities of the opposing view concede she is exempt in this case, because Mindy’s policy specifically stipulates coverage for the “property of others.” Hence, as documented by leading halachic authorities, Mindy is entitled to withhold both the cost of the wigs and the additional payment she received. Furthermore, since the wigs do not belong to any one individual, as they are essentially the property of the poor, most opinions exempt Mindy from payment for this reason alone. Nevertheless, our Bet Din instructed Mindy to take the high road and reimburse the organization solely for the cost of the loss they sustained. By reimbursing a charity organization for the loss of the value of the wigs, she successfully takes into consideration all halachic opinions. Additionally, she is contributing to the important work of the organization and helping perpetuate the hesed of her community.
YOU BE THE JUDGE
The Saga of a Destination Wedding
Jerry, the father of the bride, chose to celebrate his daughter’s wedding overseas. He invited the family members of the bride and groom, and many of their close friends. Since the extended family members included numerous observant Jews with high kashrut standards, Jerry meticulously chose a well-accepted caterer under the auspices of a reputable kashrut organization. Sometime at the end of the trip, the caterer’s manager boasted to one of the guests of the rare cuts of meat served on the wedding night. Upon further inquiry, it became apparent that the caterer served cuts of meat taken from the hind of the animal. Consequently, many of Jerry’s guests phoned their local rabbi who informed them that it was forbidden to eat such meat. The rabbi explained to them that the method of koshering hind meat properly is largely unknown, and thus the meat’s kosher status was questionable. The rabbi added, that although the meat had kosher certification, it was clearly against their custom to consume it. The uproar of complaints, and the ill feelings of the guests towards Jerry, heavily dampened the end of the trip. Jerry, who prepaid the caterer, demanded a refund from him for what had transpired. Firstly, the meat’s kosher status was questionable and is thus not customarily served. Furthermore, Jerry complained that the caterer violated his advertised kosher certification by bringing meat of a different kosher certification. Jerry was also seeking compensation for his aggravation after violating the trust of his family by serving them meat that was inappropriate.