Section 632.05. Indemnity amounts.

 

(1)   Replacement cost of coverage. An insurer may agree in a property insurance policy to indemnify the insured for the amount it would cost to repair, rebuild or replace the damaged or destroyed insured property with new materials of like size, kind and quality.

(2)   Total loss. Whenever any policy insures real property that is owned and occupied by the insured primarily as a dwelling and the property is wholly destroyed, without criminal fault on the part of the insured or the insured's assigns, the amount of the loss shall be taken conclusively to be the policy limits of the policy insuring the property.

Cross-reference: See also ch. Ins 4 , Wis. adm. code.

Arson by one spouse did not bar the other from recovering fire insurance proceeds under a jointly owned policy that insured jointly owned property. Hedtcke v. Sentry Ins. Co. 109 Wis. 2d 461 , 326 N.W.2d 727 (1982).

An administrative rule interpretation of sub. (2) that denies benefits solely on the basis of a past rental of the property would be unreasonable. Kohnen v. Wisconsin Mut. Ins. Co. 111 Wis. 2d 584 , 331 N.W.2d 598 (Ct. App. 1983).

To have “occupied" a dwelling under sub. (2) requires actual and physical control. An inanimate entity such as an estate is incapable of occupying a dwelling under sub. (2). Drangstviet v. Auto-Owners Insurance Co. 195 Wis. 2d 592 , 536 N.W.2d 189 (Ct. App. 1995), 95-0053 .

Sub. (2) does not exclude any dwellings that are owned and occupied by the insured. A building need not be exclusively residential. Seider v. O'Connell, 2000 WI 76 , 236 Wis. 2d 211 , 612 N.W.2d 659 , 98-1223 .

Sub. (2), the valued policy law, does not provide that an insured is entitled to the limits of all policies insuring a dwelling. Instead, s. 631.43 (1), the pro rata statute, specifically governs situations when two or more policies indemnify against the same loss. Absent the consent of the insurers, insureds are entitled to the full amount of their loss but not to the full amount of both policies if the combined limits exceed the actual loss. Wegner v. West Bend Mutual Insurance Company, 2007 WI App 18 , 298 Wis. 2d 420 , 728 N.W.2d 30 , 05-3193 .

Sub. (2) does not exclude real property that is owned and occupied by the insured primarily as a dwelling solely because it is not the insured's primary residence, but to be covered under the statute the property must be “occupied by the insured primarily as a dwelling." Use is the core meaning of occupy in the context of this statute. The building must be used by the insured primarily as a residence. When the primary use of a building for at least 14 months before a fire had been renting it to others, sub. (2) did not apply. Cambier v. Integrity Mutual Insurance Company, 2007 WI App 200 , 305 Wis. 2d 337 , 738 N.W.2d 181 , 06-3112 .

Sub. (2) requires the insured building be “occupied by the insured primarily as a dwelling." The insured's use must bear a relationship to actually living in the dwelling. The fact that the building was being renovated and refurbished does not affect its status as a dwelling. Whether or not a person ever slept in a house is not dispositive of whether he or she occupied it. A dwelling does not cease to be occupied as a dwelling if the people living there temporarily vacate the dwelling for renovations or if a purchaser engages in renovations before moving in. Johnson v. Mt. Morris Mutual Insurance Company, 2012 WI App 3 , 338 Wis. 2d 327 , 809 N.W.2d 53 , 10-2468 .

Administrative rules provide that real property owned and occupied by the insured that is partially destroyed but ordered razed under a fire ordinance or similar law shall be considered wholly destroyed for purposes of sub. (2). The test is not whether the property has been physically destroyed. Haynes v. American Family Mutual Insurance Company, 2014 WI App 128 , 359 Wis. 2d 87 , 857 N.W.2d 478 , 14-0395 .