Last week, North Dakota was in the news due to the fiery collision and derailment involving trains carrying crude oil. Many nearby residents were forced to evacuate – thankfully, they were unharmed.
In continuing with the state by state "Total Loss" series (my goal is to cover the remaining 15 or so states by mid-year), I focus on North Dakota this week. Similar to about a dozen other states, North Dakota has a “valued policy” statute which requires insurance companies in the event of a total loss to pay the amount written in the policy. The statue in North Dakota’s Century Code provides in pertinent part:
Whenever any insurance policy is written or renewed to insure any real property in this state, including structures owned by persons other than the insured, against loss caused by or resulting from any covered cause of loss without fraud on the part of the insured or the insured’s assigns, the amount of the insurance written in the policy is the true value of the property insured and the true amount of loss and measure of damages . . .1
In my research of North Dakota law on what constitutes a total loss, I found a North Dakota Supreme Court case that sets forth the following rule:
[T]here need not be a complete destruction, or obliteration, of a building, in order to constitute a total loss. It is sufficient that it is so destroyed that it is deprived of the character in which it was insured and rendered useless for that purpose. And where the portion left standing is not reasonably adapted for use as a basis on which to restore the building–that is, where a reasonably prudent owner, uninsured, desiring such a structure as the one in question before the damage, would not use the remnant as a basis for restoration–there is a total loss.2
So, in North Dakota, courts have adopted what appears to be a hybrid of both the "identity" test and "prudent person" test. It appears that in either instance, one can make a case for a total loss.
1 N.D.C.C. 26.1-39-05.
2 Roquette v. Farmers’ Ins. Co., 49 N.D. 478 (1922).