Like Louisiana, there is no shortage of case law describing total loss in Texas. And like many other states, the test for total loss arises from fire loss law. More than one hundred years ago, the Texas Supreme Court announced a particularly confusing test, stating,
[T]here can be no total loss of a building so long as the remnant of the structure standing is reasonably adapted for use as a basis upon which to restore the building to the condition in which it was before fore the injury; that whether it is so adapted depends upon the question whether a reasonably prudent owner, uninsured, desiring such a structure as the one in question was before injury, would, in proceeding to restore the building to its original condition, utilize such remnant as such basis.1
The Court, realizing the confusing nature of its own test, stated it more cogently in 1965,
Whether a building is an actual loss by fire depends upon whether a reasonably prudent owner, uninsured, desiring to rebuild, would have used the remnant for restoring the building.2
Perhaps the biggest concern with a test like this, is that an insurance company likely will have the opportunity to disagree about whether a structure is a total loss while still complying with its obligations to act in good faith. It seems clear that the issue of total loss should be a jury decision, as testimony will be necessary to determine what portions of the building are intact, whether those portions are usable, and whether a prudent, uninsured homeowner would use any intact, usable portions to rebuild instead of starting from scratch. As you can imagine, there are usually experts on both sides with conflicting opinions of the usefulness of anything not completely destroyed.
Texas does recognize in the same 1965 case that there can be constructive total loss. To determine if there was a constructive total loss, the Texas Supreme Court asks,
[W]as [the building] damaged to such an extent that the city ordinances would require its destruction?3
This, of course, varies from city to city, depending on local ordinances which allow for repair or require total demolition of the property.
1 Royal Ins. Co. v. McIntyre, 90 Tex. 170, 37 S.W. 1068, 1074 (Tex. 1896).
2 Glen Falls Ins. Co. v. Peters, 386 S.W. 2d 529, 531 (Tex. 1965).
3 Id.
