This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ' 480A.08, subd. 3 (1994).


Tower Insurance Company, Inc., et al.,


Jeffrey A. Foster, et al.,

Dale Cich, et al.,

Randall Wagner,

Midwest Security Insurance Company,
formerly Midwestern Life Insurance Corporation,

American Family Mutual Insurance Company, et al.,

Filed July 23, 1996
Toussaint, Chief Judge

St. Louis County District Court
File No. CO-95-61387

Lawrence M. Rocheford, Mary P. Rowe, Jardine, Logan & O'Brien, 2100 Piper Jaffray Plaza, 444 Cedar Street, St. Paul, MN 55101 (for appellants)

Cheryl M. Prince, Mark D. Pilon, Hanft, Fride, O'Brien, Harries, Swelbar & Burns, P.A., 1000 First Bank Place, 130 West Superior Street, Duluth, MN 55802-2094 (for respondents Jeffrey and Barbara Foster)

Kevin C. Cornwell, Larry Stauber, Jr., Stauber & Lien, 1011 East Central Entrance, Duluth, MN 55811-5501 (for respondents Dale and Judith Cich)

Michael E. Orman, Orman & Nord Law Firm, 1301 Miller Trunk Highway, Duluth, MN 55811 (for respondent Wagner)

Lee J. Fehr, 2700 Midwest Drive, Onalaska, WI 45650-8764 (for respondent Midwest Security Insurance Company)

D. Edward Fitzgerald, 4884 Miller Trunk Highway, P.O. Box 139, Duluth, MN 55801-0139 (for respondents American Family Mutual Insurance Company and American Standard Insurance Company of Wisconsin)

Considered and decided by Norton, Presiding Judge, Toussaint, Chief Judge, and Stone, Judge.*


TOUSSAINT, Chief Judge

On appeal from a grant of summary judgment in this declaratory judgment action, Tower Insurance Company and Westfield Insurance Company argue the district court erred in finding that the homeowner's insurance policies issued to respondents Dale and Judith Cich provided liability coverage for his snowmobile accident. We affirm.


On appeal from a summary judgment, we must examine the record to determine whether any genuine issues of material fact exist and whether the district court erred in applying the law. Offerdahl v. University of Minn. Hosps. & Clinics, 426 N.W.2d 425, 427 (Minn. 1988). "[T]he interpretation of insurance contract language is a question of law as applied to the facts presented." Meister v. Western Nat'l Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn. 1992). When the facts are not in dispute, this court must independently review the district court's interpretation of the insurance policy. Id. We must read exclusions in the insurance contract narrowly and construe any ambiguity in the policy against the insurer. State Farm Ins. Cos. v. Seefeld, 481 N.W.2d 62, 64 (Minn. 1992).

Because of the unique circumstances that surround a layperson's purchase of an insurance policy,

[t]he objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations.

Atwater Creamery Co. v. Western Nat'l Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn. 1985) (quoting Robert E. Keeton, Insurance Law Rights at Variance with Policy Provisions, 83 Harv. L. Rev. 961, 967 (1970)). The doctrine of reasonable expectations

does not remove from the insured the responsibility to read the policy but at the same time does not hold the insured to an unreasonable level of understanding of the policy.

Hubred v. Control Data Corp., 442 N.W.2d 308, 311 (Minn. 1989). The factors to be considered when applying the doctrine are

the presence of ambiguity, language which operates as a hidden exclusion, oral communications from the insurer explaining important but obscure conditions or exclusions, and whether the provisions in a contract are known by the public generally.


Here, Dale Cich bought the snowmobile involved in the accident only nine days before the accident. He did not ask Tower or Westfield to substitute the new snowmobile for one of the snowmobiles already listed on the snowmobile liability and physical damage endorsements to his homeowner's insurance policies until four days after the accident. Thus, when the accident occurred, the new snowmobile was not listed as a covered vehicle on the snowmobile liability or physical damage endorsements to Cich's homeowner's policies.

Neither snowmobile liability endorsement contained a newly-acquired property nor replacement vehicle clauses. The snowmobile physical damage endorsement to the Tower policy, however, provided that if Cich acquired another snowmobile, Tower would "cover the newly acquired property for thirty (30) days" after Cich became the owner. The Westfield policy contained similar language stating that additional property purchased by Cich "shall be insured hereunder," provided that Cich notified Westfield within 30 days of the date of purchase. The district court determined that the newly-acquired property clauses in the physical damage endorsements applied for purposes of liability coverage and that, because Cich had reported the acquisition of the new snowmobile to the insurers within 30 days of its purchase, he had liability coverage for the accident.

The insurers argue the newly-acquired property clauses in the physical damage endorsements do not apply to liability coverage. We disagree. By including a newly-acquired property clause only in the snowmobile physical damage endorsements, the insurers created a situation where any insured who relied on the provision giving him 30 days to report the purchase of a new snowmobile would unwittingly have no liability coverage for the new snowmobile during this same time period. Including a newly-acquired property clause only in the snowmobile physical damage endorsements created a hidden exclusion for liability coverage for newly-acquired snowmobiles.

Nothing in the policies or endorsements warned Cich that he would not have liability coverage for a new snowmobile if he relied on the 30-day reporting provision in the physical damage endorsements. Instead, the hidden exclusion, coupled with the language in the newly-acquired property clauses stating that Tower would "cover" newly-acquired property and that newly-acquired property "shall be insured" by Westfield, created an ambiguity as to which coverages applied to the new snowmobile during the 30-day reporting period. It cannot be said that the exclusion here was known by the public generally. Under these circumstances, the district court properly construed the policy endorsements' hidden exclusion and ambiguous language against the insurers to give effect to Cich's reasonable expectation that he had liability coverage for the new snowmobile during the 30-day reporting period.



* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, ' 10.