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RULE 46. Effect of city ordinances as to repairing or replacing

buildings in connection with statute fixing amount

of loss. 47. Depreciation when statute makes policy a valued one. 48. Effect of fraud when statute fixes amount of loss –

Contract severable. 49. When building is a total loss. 50. When building cannot be said to be totally destroyed

Total loss -- Limitations.
51. Total loss as applied to several buildings one entire

52. How total loss ascertained Tests.
53. Photographs as evidence of total loss.
54. Total loss as question of fact or law.

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Limitation upon Amount of Loss or Damage as Imposed by


The insurance company is not liable beyond the actual cash value of the property at the time any loss or damage occurs, and the loss or damage shall be ascertained or estimated according to such actual cash value, with proper deduction for depreciation however caused, and shall in no event exceed what it would then cost the insured to repair or replace the same with material of like kind and quality; said ascertainment or estimate shall be made by the insured and the company, or, if they differ, then by appraisers.

This rule is imposed by above terms in the standard form of policy prescribed in: New York,

New Jersey,

North Carolina,

North Dakota,


Rhode Island. In Wisconsin the form is the same except it is preceded “except when otherwise provided by statute.”

* See note to “Duty to Save and Preserve Property,” Rule 1,

page 2.

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The standard form of policy prescribed in:

Massachusetts, provides that “the company shall not be liable bevond the actual value of the insured property at the time any loss or damage happens;

the amount of said loss or damage to be estimated according to the actual value of the insured property at the time when such loss or damage happens.” The standard form of policy prescribed in:

Minnesota, provides that “the amount of said loss or damage be estimated according to the actual value of the insured property at the time when such loss or damage happens, except in case of total loss on buildings."

In New Hampshire, same as in Minnesota to and including the word "happens," continuing, “except on buildings totally destroyed, in which case the full amount of the limitation shall be paid.”

In South Dakota, same as in Minnesota to the word "happens,” continuing, “except that the amount of insurance written herein upon any real property, including structures on land owned by another than the assured, shall be taken conclusively to be the true value of such property and the amount of loss sustained by, and the measure of damages of, the insured, in case the same is wholly destroyed without criminal fault on the part of the insured or his assigns.”

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. Amount of Policy not the Measure of Damage. The amount inserted in the policy (unless otherwise expressly agreed or there is a statute to contrary) is neither the proper or correct measure of damage or conclusive as to amount of loss or damage; it limits, but does not govern;' when the insurance is itemized in the policy, with separate amounts on each item, there can be no recovery beyond the value of each item and the specified amount.? Policy or insurance continues in force to extent of any balance left in amount after satisfying a loss.3

1. Westchester Ins. Co. v. Wagner, 10 Tex. Civ. App. 398, 30 S. W. Rep. 959, 24 Ins. L. J. 476; Illinois Ins. Co. v. Andes

Ins. Co., 67 Ill. 362; Dacey v. Agricultural Ins. Co., 21 Hun, 83; Waynesboro Ins. Co. v. Creaton, 98 Pa. St. 451; Standard Ins Co. v. Wren, 11 Ill. App. 242; Hanover Ins. Co. v. Lewis, 23 Fla. 193, 1 So. Rep. 863; Insurance Co. v. National Bank, 88 Tenn. 369; Martin v. Capital Ins. Co., 85 Iowa, 613, 52 N. W. Rep. 534; Lion Ins. Co. v. Starr, 71 Tex. 733, 12 S. W. Rep. 45; Macarty v. Commercial Ins. Co., 17 La. 365; City of Detroit r. Grummond, 121 Fed. Rep. 963, 58 C. C. A. 301.

2. Phænix Ins. Co. v. Pfeifer (Tex. Civ. App.), 39 S. W. Rep. 1001; Continental Ins. Co. v. Chew, 11 Ind. App. 330, 38 N. E. Rer. 417; Ætna Ins. Co. v. Glasgow Light Co., 107 Ky. 77, 52 S. W. Rep. 975.

3. Mechanics' Ins. Co. v. Hodge, 149 Ill. 298, 37 N. E. Rep. 51.


Construction of Doubtful Language Favors Indemnity. If meaning or application of the language of the policy is doubtful, the construction favors the larger indemnity.

Meyer v. Queen Ins. Co., 41 La. Ann. 1000; Illinois Ins. Co. v. Hoffman, 132 Ill. 522, 24 N. E. Rep. 413. See “ Construction.”

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Damage to Personal Property.

Where personal property is damaged only, the insurance company is bound for the difference between its value in its sound and damaged condition," unless it is shown that the cost to the insured of repairing or replacing is less than such difference.2

1. Hoffman v. Western Ins. Co., 1 La. Ann. 216. 2. See Rules 1 and 5.

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Effect of Limitation to Cost of Repairing or Replacing.

The difference between the actual cash value of the property insured just before the fire and its value after the fire ceases to be the measure of indemnity, where policy provides in terms that in no event shall the liability exceed what it would then cost the assured to repair or replace the same with material of like kind and quality.

McCready v. Hartford Ins. Co., 61 App. Div. 583, 70 N. Y. Supp. 778.


Cost of Repairing or Replacing not Necessarily a Rule of Damage

in all Cases.

The cost of repairing or replacing may limit the amount of the claim, but does not necessarily of itself afford a rule or measure of damage in all cases where the policy does not in terms so provide; the option reserved by the insurance company to repair or replace is one which it may adopt or not as it thinks proper.

Commonwealth Ins. Co. v. Sennett, 37 Pa. St. 205. And see Texas Moline Plow Co. v. Niagara Ins. Co., Tex. Civ. App.

87 S. W. Rep. 192. See Rules 1 and 5, and “ Options of the Insurance Company,” “ Repair and Rebuild,” etc., Chapter Fifth.


Effect of Making Policy a Valued One - Profits.

Where the policy is a valued one, that is, where the parties intended and have agreed beforehand to estimate the value of the subject of the insurance therein and there is no question of bad faith, fraud, or mistake, the valuation is conclusive upon the parties as to the amount which the assured is entitled to receive, and to that extent it qualifies the principle underlying the contract as one of indemnity;' when the insurance is of profits the policy is of necessity a valued one.?

1. Michael v. Prussian Nat. Ins. Co., 171 N. Y. 25, affg. 6+ App. Div. 182, 71 N. Y. Supp. 918; Harris v. Eagle Fire Co., 5 Johns. 368; Williams v. Continental Ins. Co., 2+ Fed. Rep. 767; Natchez Ins. Co. v. Buckner, 5 Miss. 63; Haven v. Gray, 12 Mass. 71; Harrington v. Fitchburg Ins. Co., 124 Mass. 126; Kane v. Commercial Ins. Co., 8 Johns. 229; Lycoming Ins. Co. v. Mitchell, 48 Pa. St. 367; Universal Ins. Co. v. Weiss, 106 Pa. St. 20; W ace v. nsurance Co., 4 La. 289.

2. Mumford v. Hallett, 1 Johns. 433.


Profits to be Recoverable Must be Spécifically Insured. Profits are not recoverable unless specifically and distinctly insured as such;' or where the interest specifically insured necessarily includes them, as for instance of a contractor moving houses;- or of a lessee in rents; or owner of a patent in royalties.*

1. Niblo v. Insurance Co. of N. A., 1 Sandf. 551; Farmers' Mut. Ins. Co. v. New Holland Road Co., 122 Pa. St. 37. And see Mumford v. Hallett, 1 Johns. 433; Buffalo Elevator Co. v. Prussian Nat. Ins. Co., 64 App. Div. 182, 187, affd., 171 N. Y. 25, 63 N. E. Rep. 810.

2. Planters’ Ins. Co. v. Thurston, 93 Ala. 255, 9 So. Rep. 268.

As to insurance of a contractor's interest, see also Sullivan v. Spring Garden Ins. Co., 34 App. Div. 128; Ulmer v. Phænix Ins. Co., 61 S. C. 459, 39 S. E. Rep. 712.

3. Carey v. London Provincial Ins. Co., 33 Hun, 315.

4. National Filtering Oil Co. v. Citizens' Ins. Co., 106 N. Y. 535.


Meaning of Cash Value - Manufacturers.

In ordinary cases the actual cash value means the market price or value at the time and place destroyed, and the same rule may apply to manufacturers in

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