property destroyed. In such a case, the insurer is helpless, unless a clause like the above is inserted. In many cases, the insured is much more anxious to get cash than he is to rebuild. Hence, such an option as this, which, it must be noticed, is given not to the insured, but to the insurer, serves as a check upon extravagant claims against insurers, who might otherwise be powerless to defend themselves from virtual extortion. An election to rebuild, if it is properly exercised by giving notice to this effect to the insured, is irrevocable and supersedes all rights under the policy. The insured must then sue, not for the failure to pay under the policy, but for breach of contract in failing to rebuild." Furthermore, the insured may then recover more than the amount of the policy, the measure of damages being based on the cost of rebuilding, regardless of the amount of the insurance. 18 A further provision prevents abandonment by the insured. Abandonment will be considered in a subsequent chapter on marine insurance. 75. Same subject-Valued policy laws.-In many states, statutes known as valued policy laws have been enacted. For example, in Missouri, it has been provided that in all suits upon policies of insurance against loss or damage by fire, the defendant shall not be permitted to deny that the property insured thereby was worth at the time of the issuing of the policy the full amount insured therein on said prop 17 Hartford Fire Ins. Co. v. Peebles' Hotel Co., 27 C. C. A. 223, 82 Fed. 546. 18 Same case. erty; and in case of total loss of the property insured, the measure of damages shall be the amount for which the same was insured, less whatever depreciation in value below the amount for which the property is insured, the property may have sustained, between the time of issuing the policy and the time of the loss. Such laws, by express provision, generally supersede any agreement of the parties and have been held valid.19 It must be noted that the full amount of the policy is recoverable only in case of total loss. As to the advisability of such legislation, much has been said on both sides. On the one hand, it is contended that (1) the fire destroys the best evidence of the value, making it impossible for the insured to prove his case; (2) it is unjust for the insurer to collect excessive premium in perhaps a thousand cases and resist liability in the one case in which it is called on to pay; (3) the insurer may fully protect itself by inspecting the property at the time the insurance is issued and cut down the amount if more is applied for than should be issued. On the other hand, it is urged that (1) the destruction of the evidence may injure the insurer as well as the insured; (2) in many cases, for example, where there is want of insurable interest, the mere receipt of premium does not make the insurer liable, because the agreement is tainted with illegality; (3) the low insurance premiums of today would have to be raised to meet the cost of inspection, if examination of the property must be made in every case in advance of insurance; 19 Orient Ins. Co. v. Daggs, 172 U. S. 557. (4) there is too much arson already. Such laws increase it. Total loss. What constitutes a total loss? It is difficult to conceive of the destruction of every single particle of any building by a fire. Though much conflict of authority appears on this question, the following statement of the Minnesota Supreme Court appears very satisfactory: A building is not a total loss unless it has been so far destroyed by the fire that no substantial part or portion of it above the foundation remains in place capable of being safely utilized in restoring the building to the condition in which it was before the fire. The words "total loss," when applied to a building, mean totally destroyed as a building; that is, that the walls, although some portion of them remain standing, are unsafe to use for the purpose of rebuilding, and would have to be torn down, and a new building erected throughout. There can be no total loss of a building so long as the remnant of the structure left standing above the foundation is reasonably and safely adapted for use (without being taken down) as a basis upon which to restore the building to the condition in which it was immediately before the fire; and whether it is so adapted depends upon the question whether a reasonably prudent owner of a building uninsured, desiring such a structure as the one in question was before the fire, would, in proceeding to restore the building, utilize such standing remnant as a basis. If he would, then the loss is not total.20 20 Northwestern Mut. L. Ins. Co. v. Rochester German Ins. Co., 85 Minn. 48, 88 N. W. 265. Even though material of value is left after the fire, if the expense of removing the worthless fragments of the old building would at least equal the value of all the materials left after the fire, it has been held that a total loss exists.21 76. Notice and proofs of loss.-The New York standard policy makes provision for notice and proofs of loss to be furnished by the insured after the fire occurs. As to notice, it is provided that, “If fire occur the insured shall give immediate notice of any loss thereby in writing to this company." As to proofs of loss, it is provided that the insured "within sixty days after the fire, unless such time is extended in writing by this company, shall render a statement to this company signed and sworn to by said insured, stating" certain matters specified in regard to the loss, and furthermore, it is provided that the loss shall not become payable until "satisfactory proof of the loss" has been received by the insurer. Notice and proofs of loss must not be confused. The former is informal and must be given, at once, after the fire occurs. The latter is a formal document, for the preparation of which two months are allowed. Immediate notice. What amounts to immediate notice is purely a matter of circumstances. A period of eleven days has been considered too long a time under certain conditions, 22 notice fifty-three days after the fire has been held immediate notice where the policy was lost when the fire occurred.23 However, various family ills of the insured were held 21 Harriman v. Queen Ins. Co., 49 Wis. 71, 5 N. W. 12. 22 Solomon v. Continental, etc., Ins. Co., 160 N. Y. 595, 46 L. R. A. 682. 23 Trask v. State, etc., Ins. Co., 29 Pa. 198, 72 Am. Dec. 622. insufficient to excuse a delay of over sixty days, when interrupted by periods of abundant opportunity to give notice.24 Proofs within sixty days. In regard to the furnishing of proofs of loss, the policy expressly provides the exact time within which they must be furnished. Furthermore, it is provided in the New York standard policy that the loss shall not become payable until satisfactory proofs have been furnished. If, for the best of reasons, sixty-one days elapse before proofs of loss are furnished, shall this provision be regarded as in the nature of a penalty and hence unenforcible, or as a condition precedent to the existence of any right against the insurance company? Though the provisions in the policies vary considerably and are, of course, of vital importance in determining the answer to this question, it is interesting to note that the insured has been excused for a delay of seven years notwithstanding a requirement of proofs in sixty days.25 At the other extreme, where a railroad was însured against liability for fire caused by its engines, it was held necessary to furnish proofs within sixty days after the fire, even though the insured did not know it was liable until after the sixty days had expired.26 A conflict of authority exists as to the necessity of receiving the proofs of loss within the prescribed time if duly mailed within the sixty-day period. By the weight of authority, it appears impossible for the insurer to draw up the policy in such a way that an 24 Parker v. Farmers' Fire Ins. Co., 179 Mass. 528, 61 N. E. 215. 25 Kirk v. Ohio Valley Ins. Co., 8 Ohio Dec. 182; 6 Wkly. Law Bul. 200. 26 Eastern R. Co. v. Relief Fire Ins. Co., 98 Mass. 420. |