Minn. Stat. § 65A.32

Schmidt v. St. Paul Fire & Marine Insurance Co. · 1985 2 citations

FACTS On November 13, 1979, Schmidt and Auel bought a vacant rooming house intending to renovate it. They subsequently contacted Michael McNamee, an independent insurance agent, who submitted an application for insurance to the Minnesota Property Insurance Placement Facility. The facility's purpose is to assure that property which does not qualify for basic property *239 insurance through the normal insurance market will have access to insurance through the state bureau. Minn. Stat. § 65A.32 (1984). The facility accepted the risk, established the premiums and assigned the policy to St. Paul for servicing. On November 28, 1979, St. Paul sent Schmidt and Auel a letter stating the following: Based on the information in your application and the inspection report of the Minnesota Inspection Bureau, the premium and policy conditions will be: Perils: X Fire X Extended Coverage X VMM Term 1 Year (vandalism and malicious mischief) The letter also indicated an additional charge of $150, included in the $411.68 premium, for vacancy coverage. The coverage was to take effect on the date appellants' check was received by St. Paul. In response to this offer of coverage, Schmidt and Auel sent their check for $411.68 on December 3, 1979. Subsequently, they signed a vacancy endorsement, which limited vacancy coverage to 90 days. Schmidt and Auel did not know of the 90-day restriction at the time of signing. On October 24, 1980, the vacant rooming house burned down. Appellants submitted a claim for the full coverage of $25,000. St. Paul denied the claim because the 90-day vacancy endorsement extended only to March 5, 1980. In a special verdict, the jury found that Schmidt and Auel had never received a copy of the insurance policy containing the restrictive language of the endorsement. The court adopted this finding. The jury awarded appellants damages of $16,000. The jury further found that appellants had a reasonable expectation of coverage beyond March 5, 1980. The court found, however, that the letter of November 28, 1979, offering coverage was a binder or temporary insurance contract and that reference to the underlying policy was necessary to determine the details of coverage. See Minn. Stat. 65A.03 (1984). Since the vacancy endorsement specified that coverage was only for a period from December 5, 1979, to March 5, 1980, the court found that the reasonable expectations doctrine was not applicable. Consequently, the court held as a matter of law that the loss was not covered. From the judgment entered in favor of St. Paul, Schmidt and Auel filed this appeal.

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