When is a House a Total Loss?

Adjusters handling Mississippi property claims should know that the test for “total loss” to a dwelling by fire is not a mathematical one. In other words, the “total loss” determination cannot be made by simply comparing the cost of repairs to the policy limits.

In Mississippi, a structure is not a “total loss” if, after the fire, there is a substantial, usable remnant of the building surviving and that surviving remnant is susceptible to reasonable repairs and reconstruction. Home Ins. Co. v. Greene, 229 So. 2d 576, 579 (Miss. 1969). As noted by the Greene court, a structure is clearly a “total loss” when only the foundation remains.

Beyond that observation, however, Mississippi case law provides limited guidance on what fact patterns would meet the “substantial usable remnant” test. Mississippi courts have recognized a partial loss can exist even if after repairs, the building would be recognized as a new structure rather than the old one.

Other Mississippi courts have recognized a partial loss can exist when the remaining structure seems to be a mass of ruins on the basis that a substantial part of the building could nevertheless remain. Yet the fact some part of building remnants can be used does not necessarily result in the conclusion the building was not totally destroyed by fire.

In general, Mississippi judges will submit disagreement over whether a fire loss is total or partial to the jury. As a result, adjusters should take special care to document the claim file with detailed photographic/video proof, adjuster notes, and repair/reconstruction estimates that fully account for the nature and extent of damage to the structure.

In certain claims, insurers should also consider obtaining opinions from an engineer, a contracting expert, or both as to whether the structure is susceptible to reasonable repairs and reconstruction. In the event of a lawsuit, the evidence the adjuster collects and the expert testimony could serve vital roles at trial.