Georgia quietly sits amongst these states which have adopted what is often often called a valued coverage legislation, a doctrine that may dramatically change the result of a complete loss fireplace declare. Too many overlook simply how highly effective this statute may be when correctly understood and utilized. I’ve mentioned the historical past of valued coverage legal guidelines in “Historical past of The Valued Coverage Legal guidelines—Insurers Threatening to and Leaving Markets is Nothing New.”
Georgia’s valued coverage statute, O.C.G.A. § 33-32-5, applies to particularly described one- or two-family residential buildings insured towards fireplace. When such a construction is wholly destroyed by fireplace, and there’s no fraudulent or prison conduct by the insured, the quantity of insurance coverage listed within the coverage is deemed conclusively to be the worth of the property. That isn’t a suggestion. It’s conclusive.
This authorized precept displays a elementary public coverage selection. The legislature acknowledged the inherent unfairness of forcing a house owner, after a complete fireplace loss, to show the worth of one thing that now not exists. As an alternative, the statute shifts that burden to the entrance finish of the transaction. Insurers are anticipated to guage the chance, examine if they want, and set the coverage limits accordingly. As soon as the premium is accepted and the coverage issued, the worth is successfully locked in for functions of a complete loss.
Georgia courts have strengthened this precept. In Love v. Safeco Insurance coverage Firm of Indiana, 1 a federal courtroom making use of Georgia legislation made clear that when the statute applies, the insured is entitled to get better the face quantity of the coverage as the worth of the dwelling, topic solely to restricted statutory exceptions. The case additionally serves as a reminder that insurers typically try to keep away from the statute by way of defenses comparable to misrepresentation, coverage circumstances, or post-loss obligations. Whereas a few of these defenses might achieve very restricted circumstances, the Georgia valued coverage statute stands as a robust equalizer.
In fact, like most issues in insurance coverage legislation, the satan is within the particulars. The statute solely applies when the constructing is wholly destroyed. Partial losses don’t set off it. It doesn’t apply in conditions involving undisclosed concurrent insurance coverage, blanket insurance policies protecting a number of buildings, or builders’ threat insurance policies. There may be additionally a slender provision for losses occurring inside the first 30 days of a coverage, the place restoration is restricted to precise loss somewhat than the complete coverage limits.
What this implies in sensible phrases is simple. When a Georgia house owner suffers a complete fireplace loss, the place to begin of any severe evaluation needs to be the valued coverage statute. If the statutory components are met, arguments over market worth, substitute value, and competing professional value determinations largely fall away. The coverage restrict turns into the measure of restoration.
From a broader perspective, valued coverage legal guidelines embody a easy but vital thought: insurance coverage ought to ship certainty when it’s wanted most. After a catastrophic fireplace, the very last thing a policyholder ought to face is a protracted battle over the worth of their house. Georgia’s statute acknowledges that actuality and, when utilized appropriately, enforces the promise that the insurance coverage coverage was alleged to characterize all alongside.
Current reviews point out that a minimum of 87 properties have been fully destroyed by the Georgia wildfires. These figures are prone to enhance as authorities add to the depend and householders return to burnt areas.
Please observe that the valued coverage doesn’t apply to non-public property. Nonetheless, the query is whether or not it ought to, as famous in final 12 months’s put up, “Ought to There Be a Valued Coverage Legislation for Private Property?”
Thought For The Day
“The essence of Georgia is not only in its magnificence, however in its sense of equity and resilience.”
— Jimmy Carter
1 Love v. Safeco Ins. Co. of Indiana, No. 3:12-cv-87, 2013 WL 5442208 (M.D. Ga. Sept. 27, 2013).