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Actual loss is equatable to the market value of the property when the loss occurred. The measure of damages to be applied when a portion of an insured tract is lost because of a title defect is reimbursement for the loss sustained, which is usually the value of the land, but in the case of city property, used for building purposes, is the value plus any additional expenditures.
Plaintiff insured, David Overton, purchased a condominium unit and owner's title insurance. Ticor Title Insurance Company, the title insurer, failed to discover that the development where the unit was located was encumbered by an underlying deed of trust. The policy covered the insured against losses resulting from the enforcement of that prior underlying deed, and contained a provision that damages were not to exceed the actual losses suffered. There was default under the deed of trust and the entire project, including the unit, was sold in a foreclosure sale. Plaintiff brought a lawsuit against the insurer to recover what he had paid for the unit. The trial court awarded him $ 30,000, which reflected the fair market value of the unit at the time of loss. The insured challenged the judgment, arguing that he was entitled to recover his purchase price of $ 36,400.00 (the face amount of the policy).
Under the circumstances, was the plaintiff insured entitled to recover the face amount of the insurance policy?
On appeal, the court held that the actual loss was equatable to the market value of the property when the loss occurred. The court ruled that the contract was not ambiguous, and the language employed was not complex. The court found that although the unit had declined in value since its purchase, this could have been caused by a host of factors. The court concluded that an inflation protection endorsement had no relevance in the case. Accordingly, the court affirmed the judgment of the trial court.