Keeping with the theme of looking at total loss standards across the union, I turn my attention this week to Delaware. While Delaware was more fortunate in avoiding catastrophic destruction than nearby states New Jersey and New York, it is still important to have a solid grasp of what a total loss really is in case devastation strikes.
As we have seen before, much of the total loss discussion in Delaware centers around fire losses. In Conestoga Chemical Corporation v. F. H. Simonton, Inc.,1 an insurance company brought a declaratory relief action against a chemical company after much of the building had burned down. While considering several issues, the Delaware Supreme Court ultimately held,
As we understand the facts, when the fire was finally subdued, some portions of these buildings still remained standing but, because of certain building regulations, the proper officials ordered the remains to be demolished. This constitutes a total loss.
This is the more general rule that we typically see. Where building codes prevent the rebuilding of a structure, it is a total loss even if portions of the structure are still standing. The Delaware court further held that the insurance company was on the hook for policy limits because of its interpretation of the valued policy law in Delaware at the time.
[The insurance company] further contends that the Valued Policy Statute has no application because…[the chemical company’s] interest is only partial and it cannot recover upon the basis of a total loss, wherefore it must prove the extent of its loss.… We disagree.
Based on this case, total losses in Delaware will result in a payout of the policy limits for the building.
Stay tuned next week for yet another look at total loss around the country.