As many of our brethren clean up the destruction left behind by Hurricane Sandy, I felt it was important to provide homeowners, building owners, and public adjusters (as well as insurance companies, if it will help them pay claims) with an exploration of the total loss case law in New Jersey. This could be especially helpful given the vast devastation in the area.
New Jersey courts, like many other states, have been handling the total loss issue mostly in reference to fire losses (as has been frequently reported recently, New Jersey has never before faced a storm of this significance). In looking at fire losses, New Jersey courts have used the general rule, similar to that of Florida. New Jersey courts have held,
[I]f by reason of public regulations rebuilding is prohibited the loss is total, although some portion of the building remains which might otherwise have been available in rebuilding.1
Interestingly, that court looked further into the policy to determine there was no language that excluded liability for a constructive total loss. This seems to suggest New Jersey courts will enforce such provisions even in the face of the “general rule.”
The court took a broader look at insurance in general, stating,
When members of the public purchase policies of insurance they are entitled to the broad measure of protection necessary to fulfill their reasonable expectations. They should not be subjected to technical encumbrances or to hidden pitfalls and their policies should be construed liberally in their favor to the end that coverage is afforded to the full extent that any fair interpretation will allow.
The quest for the significance of language employed in an insurance contract is always engaged in with certain basic tenets in mind. Wherever possible the phraseology must be liberally construed in favor of the insured; if doubtful, uncertain, or ambiguous, or reasonably susceptible of two interpretations, the construction conferring coverage is to be adopted. And exclusionary clauses of doubtful import are strictly construed against the insurer.
This is language is beneficial to policyholders. If you are in New Jersey or about to head up there to assist in claims, I hope this provides assistance.
1 Danzeisen v. Selective Ins. Co. of America, 689 A. 2d 798 (N.J. App. Div. 1997).