Parks Chastain recently authored a post here in which he opined that Tennessee’s valued policy statute should apply only to losses caused by fire, not wind. I disagree.
Tennessee’s valued policy statutes (T.C.A. 56-7-801 through 803) were enacted in 1927, and last edited just a few years later. Read together, these statutory provisions, known as the "valued policy statute," require an insurer to inspect the insured premises within 90 days of issuing a "fire insurance policy," and if it fails to do so and "a loss occurs," then the face value of the policy is "conclusively presumed to be reasonable." Therefore, the plain language of the statute doesn’t limit its application only to fire losses, but rather is phrased broadly to apply to all losses (that are total in nature).
Recognizing Parks’ focus on the language of the statutes that seem to limit their application only to "fire insurance policies," it is worth noting that there are "fire insurance policies" that insure against loss caused by risks other than fire. See Ballard v. Farmers Mut. Fire Ins. Co., 1991 Tenn. App. LEXIS 799 (Tenn. Ct. App. 1991) (noting that a policy was called a "fire insurance policy" even though it insured against loss caused by fire, lightning or tornado). Further, true "fire" policies no longer exist, or at least are exceedingly rare if they do. In today’s insurance world, fire is one of many risks that has been incorporated into the modern commercial property and standard homeowner policies.
Additionally, the valued policy statute is declared to be a remedial statute, and therefore must be liberally construed. The clear purpose of the valued policy statute is to protect insureds from unscrupulous insurers which might otherwise over-insure property for the purpose of obtaining higher premiums, and then minimize or deny a claim after a total loss by taking the position that the property’s value is much less than the face value of the policy. This purpose has been recognized over and over by Tennessee appellate courts, and there is obviously no reason to differentiate between the cause of the loss (fire v. wind) when interpreting the statute to effectuate that purpose.
Finally, there is authority from our sister states which support my conclusion. For example, see Caruso v. Allstate Ins. Co., 2007 WL 625830 (E.D. La. 2007) (interpreting Louisiana’s valued policy statute (which is similar to Tennessee’s) to apply to wind losses).