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Contrary to the view that total amount available for recovery for each
successive loss is reduced by the amount of prior losses, [FN61] other jurisdictions hold that the insured may recover up to the face value of the policy regardless of the number of successive losses provided that the
insured sustains an actual loss. [FN62]
Observation: This rule has practical limits. If an initial loss lowers the value of the property, and the property is not restored to its prior value by the time the second loss occurs, the second loss is
potentially "limited" not by reduction of the applicable policy limit, but by the diminished value of the covered property. [FN63]
Policy provisions may expressly address this result, as where the insured purchases a policy which expressly states that losses thereunder will not reduce the amount available for each covered
occurrence; however, the policy may also provide that the insurer may terminate the policy within a specified period after the initial loss, and where termination occurs in a timely fashion, the insured's recovery for a
subsequent loss may be limited to the recovery of unearned premiums during the cancellation period. [FN64] Observation: Where the insurer is liable for successive losses, such liability may also dictate the
insurer's ability to offset a separate deductible as to each loss. [FN65] |
