APPEAL from a judgment of the Supreme Court in favor of plaintiff, entered October 25, 1954, in New York County, upon a verdict rendered at a Trial Term (MCGIVERN, J.).
William S. Evans of counsel (Edward J. Greenfield and Harold Glatzer with him on the brief; Glatzer, Glatzer & Diamond, attorneys), for appellant.
Milton Winn of counsel (David M. Potts and Lawrence S. Timen with him on the brief; Kadel, Wilson & Potts, attorneys), for respondent.
Plaintiff insured her jewelry and furs with defendant insurance company against all risks of loss or damage, with certain specified exceptions irrelevant to the issues in this case. The policy states that defendant insured plaintiff 'for the sum of Fifty One Thousand Six Hundred and Fifty Dollars; * * * as per schedule attached or as scheduled below'. Attached to the policy is a schedule listing and describing seventeen items of jewelry and six items of fur, and allocating a specified amount of the aggregate insurance for each article. Before insuring these articles defendant required plaintiff to furnish it with written appraisals of value for each item.
Upon the trial of this case the jury found that, under circumstances covered by the policy, articles of jewelry insured for the total amount of $40,500 had been stolen from plaintiff. The Trial Justice charged, as a matter of law, that the policy was a 'valued' policy; and that 'the amount recoverable is the amount stated in the policy, without regard to the actual value of that item at the time of the loss'. He had held throughout the trial that no proof of the value of plaintiff's property was required, since the valuation agreed upon in the policy was binding upon the parties, and therefore any evidence as to actual value became immaterial. The Trial Justice also denied
defendant's request to charge that the verdict must be limited to the market value of the property at the time of loss. The jury returned a verdict of $40,500--the full amount of the insurance coverage for the items allegedly lost.
The controlling issue in the case is whether defendant issued a valued policy; and all other points raised by the parties become subsidiary to this question.
A valued policy is one in which the parties have agreed upon the value of the property insured in the event of future loss (1 Richards on Insurance [5th ed.], § 21). 'In such a case, where the
bona fides of the transaction is not assailed and neither fraud, nor
mistake, is charged, the valuation is conclusive upon the parties, as the
amount which the assured is entitled to receive upon the happening of the
condition of the policy' (Michael v. Prussian Nat. Ins. Co., 171 N.Y.
Policies like the one in this case, insuring against hazards to property, are agreements of indemnification. They are designed to compensate an assured for the actual property loss he has sustained. In the more familiar form of coverage--the so-called 'open' policy as distinguished from the valued policy-- the amount of insurance set forth in the policy is only a statement of the limits of coverage. Up to but not exceeding these limits the insurer will pay the actual value of the property loss--an uncertain amount at the time the policy is underwritten. Therefore, the limits of coverage of an open policy are no evidence of the extent of the loss or the value of the property lost.
There can be no objection to predetermining the amount of the possible loss on some basis reasonably calculated to fix the fair value of the insured property. Conceivably, to fix value beforehand may often be a truer method than to explore value after the event insured against has caused the loss or destruction of the property to be evaluated. And many assureds and insurers are genuinely moved to work out some basis for the avoidance of unpalatable haggling and burdensome negotiation or litigation about value in event of loss. Of course, a valued policy may not disguise a wagering contract or be used as a vehicle for fraud.
Ordinarily the amount of insurance set forth in the policy is the measure of coverage rather than of damages. '[T]he mere statement of the amount of insurance does not create a valued policy' (St. Paul Fire & Mar. Ins. Co. v. Pure Oil Co., 63 F.2d 771, 772).
In the leading case of Lee v. Hamilton Fire Ins. Co. (251 N.Y. 230, 234) the Court of ...