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Insurer wins limits coverage dispute in apartment fire


An apartment complex owner is not entitled to its property policy’s full limits when only one apartment house was destroyed, says a federal appeals court, in upholding a lower court ruling.

St. Louis-based Norwood-Redfield Apartments Limited Partnership owns an apartment complex consisting of 32 buildings, according to Thursday’s ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Norwood-Redfield Apartments Limited Partnership v. American Family Mutual Insurance Co., a Wisconsin Corp.

A December 2010 fire destroyed one building and damaged two others, according to the ruling. Madison, Wisconsin-based American Family Mutual, which insured the complex under a business owners’ insurance policy, paid Norwood $2.9 million for its loss. 

Norwood filed suit against the insurer claiming it was entitled to receive the $31.8 million policy limit and charging the insurer with breach of contract and vexatious refusal to pay.

The U.S. District Court in St. Louis ruled in the insurer’s favor, which was upheld by a unanimous three-judge appeals court panel. “Norwood argues that it suffered a ‘total loss of the property insured’ because one of its buildings was completely destroyed. Norwood argues that ‘total loss’ refers to how badly the building was damaged, not to how many buildings were damaged,” said the ruling.

However, “Because fire destroyed only one building in the thirty-two building complex, Norwood did not suffer a ‘total loss of the property insured’ and thus the Missouri valued policy statute does not require to American Family to pay the full policy amount,” said the ruling, in affirming the lower court’s judgment.

American Family attorney Anthony L. Martin, counsel with Sandberg, Phoenix & von Gontard P.C. in St. Louis, said, “The court certainly ruled correctly based upon” the insurance policy. “The position the plaintiff took was never justifiable under either Missouri law” or the policy, he said.

Norwood’s attorney could not immediately be reached for comment.

The 8th Circuit ruled in January that American Family was entitled to deny coverage to a marketing firm charged with violating the Telephone Consumer Protection Act because it had properly notified its policyholder about a policy exclusion.



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