Section 4.22 Real Property

• Library: Insurance Practice 2015

Section 379.140, RSMo 2000, provides that, in the case of a total loss of real property by fire, the measure of damages equals the face value of the policy less the amount the property depreciates in value between the time of issuing the policy and the time of the loss. The insurer bears the burden of proving that the property has depreciated and, absent this proof, the policy amount conclusively establishes the value of the property. Wells v. Mo. Prop. Ins. Placement Facility, 653 S.W.2d 207, 210 (Mo. banc 1983); Meyer v. MFA Mut. Ins. Co.,543 S.W.2d 822, 827 (Mo. App. E.D. 1976). For example, if a fire totally destroys a building insured for $10,000 and the company fails to show that the property depreciated between the effective date of the policy and the time of the loss, the company must pay $10,000 even though the property was worth only $5,000 before the loss. Compare American Family Mutual Insurance Co. v. Doug Rose, Inc.,841 S.W.2d 698 (Mo. App. W.D. 1992), and Jones v. State Farm Fire & Casualty Co., 740 S.W.2d 708 (Mo. App. E.D. 1987), in which the Western and Eastern Districts of the Courts of Appeals held that the insurer was obligated to pay only the provisional limit in effect on the date of the loss and not the face value of the policy.

The words “total loss” with regard to real property as used in the valued policy statute mean that the building has lost its identity and specific...