RULE 23. Fraud to Apply for Insurance or Policy on Destroyed Property Not When Prior Sufficient Oral Contract. It is fraud when application is made for insurance or policy upon property which the applicant at the time has reason to believe has been destroyed,' but if there is a sufficient oral or parol contract of insurance, and fire occurs subsequently, insured is not bound to notify the company of the destruction of the property on delivery of the policy.2 1. Hart v. British F. & M. Ins. Co., 80 Cal. 440, 22 Pac. Rep. 302; Nippolt v. Firemen's Ins. Co., 57 Minn. 275, 59 N. W. Rep. 191, 23 Ins. L. J. 577. And see Wales v. New York Bowery Ins. Co., 37 Minn. 106, 33 N. W. Rep. 322; Henshaw v. Insurance Co. of State of New York, 36 Misc. 405, 73 N. Y. Supp. 1; Union Ins. Co. v. American Ins. Co., 107 Cal. 327, 40 Pac. Rep. 431, 24 Ins. L. J. 785, 28 L. R. A. 692. 2. Worth v. German Ins. Co., 64 Mo. App. 583. CHAPTER FIFTH. The Options of the Insurance Company. TITLE 1. To take property at ascertained or appraised value. 2. To repair, rebuild, or replace. TITLE I. Option to Take Property at Ascertained or Appraised Value. RULE 1. Option to take at ascertained or appraised value as imposed by contract. 2. Right valid and enforceable. 3. The option as affected by time. 4. Effect of disposition of damaged goods by insured Notice. 5. When company not prejudiced. 6. Effect of exercise of option as waiver. 7. Effect of repudiation of an award by appraisers. RULE 1. Option to Take at Ascertained or Appraised Value as Imposed by Contract. The insurance company has the option to take all or any part of the articles at the ascertained or appraised value, on giving notice, within thirty days after the receipt of the proof required, of its intention so to do. This rule is imposed by above terms in the standard form of policy prescribed in: New York, Michigan, New Jersey, North Carolina, North Dakota, *Pennsylvania, * See note to "Duty to Save and Preserve Property," Rule 1, page 2. The standard form of policy prescribed in: Maine, Massachusetts, does not contain such provision. Minnesota, The South Dakota form provides: "It shall be optional with the company to take all or any part of the articles of personal property injured or damaged at the actual or appraised sound value thereof without deduction for damage." In the States where no standard form is prescribed and other than those above named, the New York standard form is in general use. RULE 2. Right Valid and Enforceable. The right of the insurance company to take any part of the property at its ascertained or appraised value as reserved in the policy is valid and enforceable. Hamilton v. Liverpool, L. & G. Ins. Co., 136 U. S. 242 ; Hamilton v. Home Ins. Co., 137 U. S. 370. RULE 3. The Option as Affected by Time. The period of thirty days prescribed for exercise of the option reserved commences to run from the time of an amended and completed statement or proof of loss, and not necessarily from the time such a paper is originally furnished, which is defective in material substance. Kelly v. Sun Fire Office, 141 Pa. St. 10; German-American Ins. Co. v. Hocking, 115 Pa. St. 398. And see Putze v. Saginaw Valley Ins. Co., 132 Mich. 670, 94 N. W. Rep. 191, revg. on rehearing previous opinion, 86 N. W. Rep. 814. And see "Payment of the Loss," Rules 3 and 4. RULE 4. Effect of Disposition of Damaged Goods by Insured Notice. While the fact that the assured sells the saved or damaged goods or property, before the expiration of the thirty days reserved for exercise of the option by the company to take them, does not affect the right of the company to demand compliance with the condition; still, where the assured has given notice of such sale, assured is not in fault for selling where the company has not taken steps at any time to show that it wished to avail itself of the option. Davis v. Grand Rapids Ins. Co., 15 Misc. 263, 36 N. Y. Supp. 792, affd. without opinion, 157 N. Y. 685. And see Chainless Cycle Co. v. Security Ins. Co., 52 App. Div. 104, 64 N. Y. Supp. 1060, affd., 169 N. Y. 304, 62 N. E. Rep. 392; Swearinger v. Pacific Ins. Co., 66 Mo. App. 90. And see "Appraisal," Rule 15. RULE 5. When Company not Prejudiced. The insurance company cannot claim that it has been deprived of its right to take damaged or saved goods at their appraised value, when only a fraction of such goods has been disposed of by the assured with the implied consent of the company, and a full description of the articles disposed of has been preserved, and enough remains to satisfy the particular company's claim. Palatine Ins. Co. v. Morton-Scott Co., 106 Tenn. 558, 61 S. W. Rep. 787; North German Ins. Co. v. Morton-Scott Co., 108 Tenn. 384, 67 S. W. Rep. 816. RULE 6. Effect of Exercise of Option as Waiver. After the insurance company exercises its option by taking and selling the damaged property and learns then for the first time of a fact voiding the insurance under another condition of the policy, the abandonment of the adjustment without taking steps to rescind the sale, or to provide for payment of the purchase price to the assured, or without doing any act to restore to him what was taken from him under the policy, will not prevent a waiver of the forfeiture;1 the authority of an adjuster may be presumed.2 1. First Nat. Bank v. Manchester Assur. Co., 64 Minn. 96, 66 N. W. Rep. 136, 25 Ins. L. J. 272. 2. First Nat. Bank v. Lancashire Ins. Co., 65 Minn. 462, 68 N. W. Rep. 1. RULE 7. Effect of Repudiation of an Award by Appraisers. Repudiation by the company of an award of appraisers operates as a waiver of the option to take at appraised value. Model Dry Goods Co. v. North B. & M. Ins. Co., 79 Mo. App. 550. TITLE II. Option to Repair, Rebuild, or Replace. RULE 1. Option to repair, rebuild, or replace as imposed by contract. 2. Right of insured to repair. 3. Effect of removal or disposition of property by insured Notice. 4. Assignment subject to right of company. 5. Power of adjuster. 6. Option as affected by time. 7. Must be in limited time. 8. No money demand until after expiration of time. 9. Effect of exercise of option - Building contract. 10. When more than one company upon loss. 11. Mere notice does not change contract. 12. Effect of exercise of option on mortgagee to whom loss payable. |