Usually, a fire insurance pays a policyholder the actual cash value or replacement value of the property being destroyed. But in 20 states, if there is a total loss, the amount the insurer must pay is equal to the value of the property when the policy was issued. What happens if the policy covers a multi-purpose complex and one of the buildings is destroyed? The eighth court has recently dealt with this issue.
Norwood-Redfield Apartments Limited Partnership against American Family Mutual Ins. Co. No. 18-2618 (May 8, May 16, 2019) (Not published), the Appeal Court confirmed a judgment in favor of the insurance company to deny the policyholder's claim for recovery of the full value stated in an entire complex of buildings when only one of the buildings were destroyed. The policyholder sued his insurance company after a fire destroyed one of the buildings of 32 in the complex. The insurance company paid nearly $ 3 million for the loss, but the policyholder wanted more than $ 31 million in political limits.
The case was in Missouri where the fire policy is covered by the state's valued real estate law, Mo. Reef. State § 379.410. The statute provides that the insurer cannot deny that the value of the insurance policy was less depreciation at a fire police after a total loss of the insured property. Here, the policyholder claimed that there was a total loss because one of the buildings was completely destroyed and it did not matter how many buildings there were.
Upon refusal of the policyholder's argument, the court concluded that the insurance was 32 building complexes and not every building in the complex. As the Court pointed out, the insurance side described the coverage as insurance cover in 32 buildings with each building described as a single room. The policy clarified that the limit of liability applied to all premises described in the declarations. Since the fire destroyed one of the buildings, the valuation statute did not require the insurer to pay the full amount. The statute provides that, in the event of a partial loss, the indemnity is the part of the value of the whole insured property that the destroyed part carries over the entire insured property. Since there was no total loss, the total political border was not involved.