§ 36.5 Compilation of Damages

• Library: Insurance Law in Oregon (OSBar) (2020 Ed.)

§ 36.5 COMPILATION OF DAMAGES

§ 36.5-1 Predetermined Value

Some insurance policies are "valued" with an agreed amount to be paid by the insurance company in the event of a total loss. Inland marine personal-property floaters and business-interruption insurance are examples of insurance coverages in which a valued form is sometimes used. It is against public policy in Oregon to write a valued fire policy. See generally chapter 10.

If a policy sets the value of a crop and provides a formula to fix the percentage of loss against the predetermined value, the measure of the loss is determined on the value of the crop at the time of the loss. Therefore, evidence of the loss of market or sales value is not relevant in determining the amount of the loss. The sales records of the insured would have no bearing in determining the insurer's liability. Oregon Orchards, Inc. v. Ins. Co. of N. Am., 239 Or 192, 199, 397 P2d 75 (1964).

PRACTICE TIP: If the policy is not valued or the loss is only partial, give immediate consideration to proving the loss. It may be desirable to have experts examine the property before it is disturbed.

§ 36.5-2 Value at the Time of Loss

Most fire insurance policies are paid on the "actual cash value" of the loss, which in most instances is the cost to repair or replace less applicable depreciation. Generally, the insurance policy defines actual cash value. When the term is undefined, the court will interpret the provision consistent with the analysis in Hoffman Constr. Co. v. Fred S. James & Co., 313 Or 464, 836 P2d 885 (1992).

Most fire policies also provide replacement-cost benefits, which provide coverage above and beyond the value at the time of the loss for the amount necessary to actually repair or replace the property. To prevent the so-called moral hazard, actual repair or replacement is required to obtain replacement-cost benefits. See, e.g., Patton v. Mut. of Enumclaw Ins. Co., 266 Or App 154, 337 P3d 874 (2014), rev den, 354 P3d 696 (Or 2015).

The policy will ordinarily provide a basis for measuring the loss. Expert testimony may be required to determine the value of things not in general use. A person with ordinary intelligence is qualified to appraise items in general use. Dakin v. Queen City Fire Ins. Co. of Sioux Falls, S.D., 59 Or 269, 272, 117 P 419 (1911). In Dakin, the court held that it was error to...