Q. One of our insured’s had a total loss by fire to their home. Isn’t there a valued policy law in Texas? How does it apply?
A. Section 862.053 of the Texas Insurance Code reads as follows:
“(a) A fire insurance policy, in case of a total loss by fire of property insured, shall be held and considered to be a liquidated demand against the company for the full amount of such policy. This subsection does not apply to personal property. (b) An insurance company shall incorporate verbatim the provisions of Subsection (a) in each fire insurance policy issued as coverage on real property in this state.”
You will find the policy language in the policy as “Policy a Liquidated Demand.” It is important to note that it only applies to a total loss by fire (not other perils) and it only applies to the building/dwelling, not personal property.