With Isaac slowly moving north through the Louisiana and Mississippi area, it seems appropriate to provide those who may be suffering the effects of this storm with an analysis of total loss. I wrote about Louisiana a few weeks ago, and now I turn to Mississippi.
As with many other states, Mississippi’s definition finds its roots in fire insurance. As mentioned before, this standard for fire losses can easily be used to cover losses from windstorms or nearly any other type of disaster. In 1935, the Mississippi Supreme Court recognized that,
The courts have had considerable difficulty in determining what constitutes the total loss of a building by fire within the meaning of policies of insurance.1
The Court further recognized that,
[T]wo conflicting rules have been adopted, which are as follows: One rule-and it is the earlier one -provides that a total loss has been sustained whenever the building has been so injured as to lose its identify and specific character as such; and the other declares that it is not totally destroyed so long as a substantial remnant remains which a prudent uninsured person would use in rebuilding; and the reported decisions are founded on one or the other of these rules.2
The Mississippi Court turned to Minnesota for assistance. Citing to Northwestern Mutual Life Insurance Company v. Rochester German Insurance Company,3 it reasoned,
Where the line is to be drawn between these two conditions is, in each particular case, a question of fact. It adds nothing to say that total loss occurs when the identity and specific character of the structure is destroyed. We receive no aid from the suggestion that total loss ensues when the reconstructed building would be recognized as a new, rather than the old, structure. No light is thrown on the situation by the declaration that total loss follows from the fact that the remnants constitute a mass of ruins, for amidst the ruins may remain a substantial part of the building. In arriving at a determination of what a prudent owner would do under such circumstances, it is proper to consider not only the condition of the walls standing, whether they are suitable, in place, to be used as a part of the reconstruction, but also the relative value of such walls, in place, as compared with the cost of rebuilding. It does not follow that, because some part of the remnants may be utilized, in place, there is not substantial and total destruction and loss. The law will not take note of trifles in this respect. It follows that there must remain a substantial part of the building in place, which, with reasonable repairs, can be used in its reconstruction. What such substantial part is a question of fact depending upon the nature and cost of the structure and the character and condition of the remaining parts.4
Ultimately, the Court held that,
[S]ubstantial parts of a building must remain in place, above the foundation, in order to prevent the destruction of the building from being total. If only the foundation of the building remains in place, the building is totally destroyed within the meaning of the policies, although some parts of the building remain in such condition as to be of value as salvage.5
1 Franklin Fire Ins. Co. v. Brewer, 159 So. 545, 548 (1935).
3 Northwestern Mutual Life Ins. Co. v. Rochester German Ins. Co., 88 N. W. 265, 270 (Minn. 1901)
4 Franklin Fire, 159 So. at 548.