Continuing with a state-by-state analysis of the total loss standard across the nation, I turn this week to Kentucky. As we have seen in other states, Kentucky’s provisions find their roots in fire insurance policies. Back in 1901, one appellate court wrote a rather in depth opinion not only solidifying what they believed “total loss” to mean, but also codifying the concept of property insurance in general.1
Specifically, the court noted,
What is the contract of insurance? What does it insure? It is, as is universally held, an indemnity against loss to the property owner; but an indemnity against loss of what? An examination of the standard contracts of insurance at once shows that the thing insured is the building or structure as such, and not the materials of which it is composed. We find in all or nearly all of such contracts a provision that if the building should fall before, and not caused by, fire, and then be consumed by fire, the contract does not cover such loss. Therefore it is not the material that is insured as such against loss or damage by fire, but it is the structure.
The court further recognized that instances where every single piece of a building is turned to ash would leave little argument about whether the loss was total. Similarly, the court recognized that there are clear instances of only partial loss.
Ultimately, the court stated,
The difficulty arises where the loss is so great that it appears to go beyond one that is partial, and to come probably within one that is total. The nearer the dividing line between the two, the greater is the difficulty to determine the fact. Yet each case must fall within the one or the other of the list.
Prior Kentucky case law had established that,
It is the opinion of the court that the words ‘total loss,’ when applied to a building, do not mean that the materials of which the building was composed were all totally destroyed and obliterated. It is not necessary that all of the parts and materials composing the building should be absolutely and physically destroyed, but the inquiry always is, does the insured building after the fire still exist, preserving substantially its identity, or has it become so broken and disintegrated that it cannot be designated as the structure which was insured? There may be a total loss, within the meaning of the statute, even though some parts of the building may remain standing after the fire.2
The Thuringia court ultimately held,
We feel justified in stating that there is total loss of a building, when caused by fire or in consequence of fire, when the building as such has been so injured or damaged as to destroy its identity and specific character as a building, though much or any quantity of the material originally composing it is not consumed; or when a building has been so damaged by fire, or by reason of fire, that its character as a building has been so impaired as to be no longer safe and fit for use as such, and in consequence the material would have to be taken down and the building reconstructed, there is a total loss of that building, within the contemplation of the statute; or where so much of the material of which the building was made has been destroyed by fire, or by reason of fire, as to leave what remained of no material value as a building, although it may have value as debris or salvage, there has been a total loss of that building, within the contemplation of the statute. If the remaining part of the building can, by repairing it, be restored to the former condition of the original just before the fire, the loss would be a partial one; but if, instead of repairing a damaged part, substantially a reconstruction of the whole would be necessary to restore the building, then the loss is total.3
1 Thuringia Ins. Co. v. Mallott, 64 S.W. 991, 992 (Ky. 1901).
2 Palatine Ins. Co. v. Weiss, 109 Ky. 464, 59 S.W. 509 (Ky. 1900).
3 Thuringia, at 992.
