Valued policy laws by state: what they pay on a total loss, and where they stop

A valued policy law settles one argument before it can start. When an insured building is wholly destroyed by a peril the statute reaches, the insurer pays the amount of insurance written in the policy for that building, and neither side reopens the question of what the building was worth. Nebraska's statute, section 44-501.02, states the principle most plainly: the amount written in the policy is conclusively the true value of the property and the measure of damages.

The laws differ far more than the shared name suggests. Some reach fire and nothing else. Two name the windstorm and tornado losses their states actually suffer. The broadest reach every peril the policy covers. Two apply only to homes. And none of them does the thing owners most often hope for after a catastrophe, which is to turn an excluded loss into a paid one. This guide sets out what our state research records for the twenty states where it finds a valued policy statute, the limits that hold across all of them, and what the statutes mean for the building limits you set at renewal.

What a valued policy law pays

Three conditions have to line up before a statute of this kind decides a claim. The loss has to be total. The property has to be the insured building, the real property rather than its contents. And the cause has to be a peril the statute names. When all three line up, the stated amount is the recovery. Florida's section 627.702 and where it stops is a clear example: when a building is a total loss from a covered peril, the insurer pays the amount stated in the policy for that building rather than relitigating its value after the fact.

Everything short of a total loss is adjusted the ordinary way. A roof torn off, a wing burned out, a ground floor under water: each is measured under the policy's own valuation terms, at replacement cost or actual cash value as the policy says, less the deductible, and reduced by coinsurance if the limit was set too low. Partial losses are far more common than total ones, so even in the states with the broadest statutes, the valuation clause in the policy decides most claims.

Statutes that reach fire alone

The oldest and narrowest pattern pays the stated amount when a building is destroyed by fire. Our research records statutes of this kind in eight states:

• Arkansas, for real property on fire total losses. Its courts apply the statute firmly: in the Arkansas two-policy ruling, the state Supreme Court let an insured recover the face value of two separate policies on the same destroyed property, because each stated amount was conclusive.
• Mississippi, New Hampshire, Tennessee and West Virginia, each for buildings on fire total losses.
• Ohio, for buildings insured against fire, where the policy amount for the structure is the measure of recovery.
• South Carolina, where the amount stated in the policy is conclusive on value for a building lost to fire.
• Texas, for real property destroyed by fire.

A fire-only statute protects less than it sounds in a state where storms produce the large losses. Texas, where hail and windstorm fall outside the statute, pays the policy amount on a fire total loss, but a building destroyed by wind or hail is adjusted on the policy's own valuation terms. Tennessee and Ohio have the same gap for tornado and convective storm, and New Hampshire's statute does not reach the winter and water losses that drive its claims. On the South Carolina coast, named storm losses settle on the policy's valuation provisions, and where a wind pool policy and a separate all other perils policy insure the same building, each contract's own terms govern its own perils.

Two statutes that name wind

The Kansas and Nebraska laws name the losses their buildings actually take. Under the Kansas law naming tornado, windstorm and lightning, improvements on real property lost to fire, tornado, windstorm or lightning are insured at the amount written, which the statute says is conclusively the true value. A tornado total loss of a Kansas commercial building therefore settles at the policy amount.

Nebraska's statute is one of the broadest and oldest in the country. When real property insured against fire, tornado, windstorm, lightning or explosion is wholly destroyed without criminal fault of the insured, the amount written in the policy is the measure of damages. Nebraska's statute and its heavy hail exposure make the building limit a promise in both directions: fully protected if it is set right, and premium wasted if it is set high.

New Mexico sits between the two groups. Its statute applies to total losses from fire or natural disaster other than flood or earthquake, a wider peril set than the fire-only laws. The flood carve-out matters more there since 2022, because the burn scar flooding that now follows New Mexico's fires sits outside both the statute and the standard property form. The New Mexico flood and earthquake carve-out shows that a statute broader than most can still leave out the loss that now follows the state's fires.

Statutes that reach every covered peril

The broadest laws apply to a total loss from any peril the policy covers. Our research records this form in Minnesota, Montana, North Dakota and South Dakota, and in Florida and Louisiana, whose statutes pay the stated amount on a total loss to an insured building from a covered peril.

• Minnesota's covered-peril statute is one of the country's broadest, paired with heavy carrier attention on the hail-damaged roofs that are claimed constantly, so roof terms decide the premium far more than the statute does.
• Montana, North Dakota and South Dakota reach covered perils generally, so a total loss from tornado, wind, hail or fire settles at the stated amount.

Missouri: the statement of values becomes the payment

Missouri rewrote its statute, section 379.140, in 2021 in two ways that matter for commercial schedules. It now applies to all covered perils rather than fire alone. And for property written on a blanket basis, a total loss to one building settles on the value assigned to that building in the statement of values, whatever the blanket limit says. An understated building on the schedule caps its own recovery even when the blanket limit is far higher, which turns the statement of values from an underwriting form into a payment document. Missouri's 2021 rewrite and blanket schedules covers the detail. The state's separate partial loss statute still applies only to fire.

Georgia and Wisconsin: statutes that do not reach commercial property

Georgia has a valued policy statute, but it is written for one and two family dwellings and limited to fire. It gives no protection to commercial property. A Georgia apartment, hotel or senior living owner settles a total loss on the policy's own valuation terms, so replacement cost adequacy and a review of values every year are the protection the statute does not provide. How hotel property programs are valued and placed shows what that review involves for a class whose contents and renovations change values between renewals.

Wisconsin's section 632.05(2) names no peril but reaches only real property the insured owns and occupies primarily as a dwelling, so a Wisconsin commercial building outside the dwelling statute also settles on the policy's own terms.

What no valued policy law does

Four limits hold everywhere our research records a statute.

• An excluded cause stays excluded. After the 2005 hurricanes, courts held that the Louisiana statute does not convert an excluded flood loss into a covered one: the total loss has to be caused by a covered peril. Mississippi litigation after Katrina reached the same place, and the lesson carries into every coastal placement. The flood layer has to stand on its own, because no statute will stretch a wind policy over storm surge. Louisiana's surge and flood rulings are the reference point.
• Flood sits outside the statute and the policy alike. In the North Dakota statute beside Red River flooding, flood, the valley's signature loss, is excluded from the property policy entirely, and no valuation statute touches it.
• The deductible still applies. In Kansas, the statute fixes the top of the recovery while a percentage wind deductible takes its share off that number. South Dakota pairs the same way: the statute decides the rare total loss and the deductible structure decides the frequent partial claims.
• Partial losses and repairs follow the policy. Florida's separate matching rule for repairs, section 626.9744, applies to residential property insurance. A commercial owner arguing about mismatched roofing or siding after a partial loss is negotiating policy language, with no statute behind the argument.

Where our research records no statute

Two states in our research are recorded as having no valued policy law. In each, a total loss settles on the policy's own valuation provisions.

Massachusetts offers something different in its place: claim conduct law. Chapter 93A and Chapter 176D give policyholders a cause of action for unfair claim settlement practices, with the possibility of doubled or trebled damages. Massachusetts and Chapter 93A is among the strongest such regimes in the country, and it changes the negotiating position in a disputed commercial claim.

Oregon's notable insurance law concerns wildfire instead: insurers may not base rating or cancellation on the state's wildfire hazard map, though carriers can still score wildfire with their own catastrophe models.

Setting the limit in a valued policy state

A statute that pays the stated amount turns the building limit into the outcome of a total loss, so it has to be set deliberately in both directions. Set it low, and the statute caps the recovery at a number that will not rebuild. Set it high, and the extra premium buys nothing, because the law pays what was written and no more. The honest figure is the current cost to rebuild, and in some places that runs higher than owners expect: Montana's broad statute and remote-area rebuilding costs make replacement cost adequacy a genuine review item.

Checking that figure is the subject of our guide to testing building values before the renewal is bound, which also covers coinsurance and blanket limits. In the hail states, where a percentage deductible comes off the stated amount, our guide to what roof age does to a hail deductible covers the other half of the calculation. For how the property form itself adjusts a loss, including replacement cost, actual cash value and the appraisal clause, see what the commercial property form covers and excludes.

Statutes are amended and courts read them, so this guide describes what our research records and is general information. The wording of your policy and the current text of your state's law decide an actual claim, as our note on general information and the issued policy explains.