Carpenter v. Liberty Ins. Corp

The U.S. District Court for the Southern District of Ohio recently held that, in the context of a value policy statute, a building does not constitute a total loss unless the building loses its identity and specific character as a building and cannot be reconstructed. The insured’s home sustained a fire loss. The carrier afforded coverage, but it did not issue the full limit of liability for the dwelling. The insured sought the full limit of liability for the dwelling in accordance with Ohio’s valued policy statute on the grounds the dwelling damage constituted a “total loss.” Relying on Ohio statutory and case law, the court concluded that a total loss must include both the “absolute extinction” of a building and the inability to repair or reconstruct it. Based on photographs taken shortly after the fire, the court reasoned that the insured is barred from arguing that their home was a total loss because the building was not in ruins and did not lose its character or identity. As the insured’s home was able to be repaired, it was not a total loss, and the insurer was not obligated to pay the policy limit.