September 4, 2019
In Norwood-Redfield Apartments, Limited Partnership v. American Family Mutual Insurance Company, Apartments owned an apartment complex consisting of 32 buildings. A fire occurring in 2010 destroyed one building and damaged two others of the 32 building complex. The Apartments were insured under a business owners insurance policy and American Family paid the Apartments approximately $2.9 million for its loss as a result of the fire. Apartments filed suit alleging breach of contract and vexatious refusal to pay, claiming they were entitled to receive the policy limits of nearly $32 million claiming it had suffered a total loss of the property insured under Missouri’s valued policy statute, Section 379.140 RSMo. American Family removed the case to Federal District Court which granted American Family’s motion for partial summary judgment and later entered final judgment.
Apartments argued that it suffered a “total loss of the property insured” because one of its buildings was completely destroyed. It argued that “total loss” refers to how badly the building was damaged, not how many buildings were damaged. According to Apartments’ reading, the Missouri valued policy statute does not allow the insurance company to dispute the policy’s valuation of each “building” and requires payment of the policy limits of some $32 million for Apartments “total loss”.
On appeal, the court concluded that the “property insured” is the 32 building complex and not each building in the complex. The policy declarations described the insurance coverage as “blanket insurance at the following described premises”, thereafter describing the 32 premises, each consisting of one building. The blanket endorsement explains that the limits of insurance in the declarations applies to all the premises described in the declarations, meaning that the insurance company would pay no more than approximately $32 million for loss or damage to the 32 buildings. Since the fire destroyed only one building of the 32 building complex, Apartments did not suffer a “total loss of the property insured” and therefore the Missouri valued policy statute did not require American Family to pay the full policy amount. Judgment in favor of the insurance company was affirmed by the Eighth Circuit Court of Appeals.