Midwest Office Technology, Inc. v. American Alliance Insurance Company

437 N.W.2d 555 (1989)

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Nature of the Case

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Facts

P purchased a business protection insurance policy from D covering losses of inventory up to $600,000. P selected a policy that provided variable coverage corresponding to the amount of inventory P reported. Although the policy had a stated limit, the premiums were determined from the average inventory which the insured was required to report on a monthly basis. If a report was delinquent at the time of a loss, the coverage was limited to the amount listed in the last report filed prior to the loss. P made inventory reports occasionally, but less often than the monthly requirement. The clause in dispute provides: At the time of any loss if the insured has failed to file with the Company reports of values as above required, this policy, subject otherwise to all its terms and conditions, shall cover only the locations and for not more than the amounts included in the last report of values filed prior to the loss. . . P had not filed its monthly report when a fire destroyed P's inventory. The loss was valued at over $600,000. P sought the entire policy limit of $600,000. D paid only $478,619.00, the amount of inventory claimed by P in its most recent report prior to the fire. P sued D for breach of contract claiming damages for the difference between the policy limit and the amount D had actually paid on the loss. The trial court concluded that P's breach of the monthly reporting requirement neither increased the risk nor contributed to the loss incurred. It determined the recovery should not be limited by its breach. D appealed.