This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (1996).




Bruns, Inc.,

d/b/a Paul's IGA,



AMCO Insurance Company,


Filed March 10, 1998


Foley, Judge**

St. Louis County District Court

File No. C9-97-100079

John M. Colosimo, Colosimo, Patchin, Aronson & Kearney, Ltd., 301 Chestnut Street, Virginia, MN 55792 (for respondent)

Mark S. Brown, Hanson, Lulic & Krall, Suite 500, 920 Second Avenue South, Minneapolis, MN 55402 (for appellant)

Considered and decided by Davies, Presiding Judge, Peterson, Judge, and Foley, Judge.

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


FOLEY, Judge

AMCO Insurance Company challenges summary judgment in favor of respondent Bruns, Inc., d/b/a Paul's IGA. The issue concerns the applicability of a seasonal 25% increase in an insurance policy's business personal property loss coverage. Because the terms of the policy are not ambiguous and provide that Bruns's "average monthly values" shall be measured by replacement cost, Bruns is not entitled to the 25% increase, and we reverse.


Bruns sustained a fire loss on June 27, 1994 resulting in almost total destruction of his store and loss to the building, equipment, inventory, and personal property. Bruns had purchased a fire insurance policy from AMCO Insurance Company (AMCO). The policy provided that AMCO would pay the replacement value of damaged or destroyed property up to $300,000. The policy also provided that an additional 25% "seasonal adjustment" would be paid automatically if the business personal property limits equaled at least 100% of the "average monthly values" of such property for the preceding 12 months.

Bruns submitted an itemized list to AMCO of the destroyed items of business personal property along with their replacement cost, which totaled $448,525.19. AMCO paid the $300,000 policy limits.

Bruns submitted a letter to AMCO claiming the additional 25% seasonal adjustment. Bruns enclosed a schedule of monthly values of personal business property from June 1993 through May 1994, as well as copies of the balance sheets used to calculate the values. Bruns requested a 25% increase in coverage limits because, according to its calculations, the average monthly values for the year prior to the loss equaled less than $300,000. AMCO denied Bruns's claim for the 25% adjustment.


When reviewing an appeal from a summary judgment, this court must determine whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. American Commerce Ins. Brokers, Inc. v. Minnesota Mut. Fire & Cas. Co., 551 N.W.2d 224, 227 (Minn. 1996). Whether an ambiguity exists in an insurance policy is a question which this court reviews de novo. Id.

"The language of an insurance policy will be held ambiguous only if it is reasonably subject to more than one interpretation." Id. "If an ambiguity exists, the court construes the language against the insurer." Id. But the court must "`fastidiously guard against the invitation to `create ambiguities' where none exist.'" Id. (quotation omitted). Where the policy is clear and unambiguous, we will "attribute the usual and accepted meaning to the phrase." Id. at 227-28.

AMCO argues that the phrase "average monthly values" is clear and unambiguous, and that the phrase is intended to be applied by calculating the average monthly replacement cost of the property lost. Bruns counters that the phrase is not defined in the insurance policy and should be determined by calculating acquisition cost minus depreciation.

The district court determined that the term is ambiguous and is reasonably subject to more than one interpretation. We disagree. The insurance policy provides:

In the event of loss or damage covered by this policy: * * *

d. We will determine the value of covered property as follows:

1) At replacement cost (without deduction for depreciation) * * *.

a) You may make a claim for loss or damage covered by this insurance on an actual cash value basis instead of on a replacement cost basis. In the event you elect to have loss or damage settle on an actual cash value basis, you may still make a claim on a replacement cost basis if you notify us of your intent to do so * * *.

We conclude that the district court erred when it determined that the insurance policy is ambiguous for purposes of calculating the average monthly values. The loss payment section distinguishes between two methods of calculating the value of covered property. As a general rule, the insurance company values covered property at replacement cost, except for limited exceptions that Bruns does not allege are applicable to this case. If, however, the claimant wishes to make a claim for loss on an actual cash value basis it may do so.

Here, the claims adjuster requested Bruns to inventory damaged property and submit the replacement cost. Bruns did not request benefits on a cash value basis, and the provision in the insurance policy requiring calculation according to an actual cash value basis did not apply. Accordingly, the replacement cost method is the only reasonable means of calculating the average monthly values of the covered property during the twelve months prior to the loss. Because the parties do not dispute that the average monthly values for the year prior to the loss calculated according to the replacement cost method are greater than $300,000, the 25% seasonal adjustment does not apply.

We are unpersuaded by Bruns's argument that average monthly values should be calculated by using the acquisition cost minus depreciation method. The insurance policy contemplates only two types of claims: claims based on their replacement value or actual cash value. The insurance policy does not refer to acquisition cost minus depreciation. The only basis for using this method is the fact that Bruns's accountant used it to keep track of the company's internal records. Because the language in the insurance policy is unambiguous and provides for replacement cost, the insurance policy controls.

Reversed with directions to vacate judgment and interest.