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Paper Savers12/19/1996
JOHNSON, J.
An insured appeals from a summary judgment entered in favor of an insurance company and insurance agent. The insured alleges the agent misled him regarding the extent of coverage for losses of business personal property provided by the insurance policy he purchased. We conclude there are genuine issues of triable fact whether the agent made the representations, and if so, whether they were sufficient to impose a special duty on the insurer. Accordingly, we reverse.
FACTS AND PROCEEDINGS BELOW
Mike Peltier (Peltier) was the president and sole shareholder of appellant, Paper Savers, Inc. (Paper Savers). In 1989, John David Nacsa (Nacsa), an agent for Truck Insurance Exchange (Truck), offered to provide Peltier's firm a commercial insurance policy.
According to Nacsa, he met a few times with Peltier at the Paper Savers facility before submitting the company's application for insurance coverage. Although he walked through the paper bag manufacturing plant, he was not asked to inventory or appraise the company's equipment or other personal property. Nacsa reviewed Paper Savers' existing policy providing for a total of $500,000 in liability and personal property coverage. He discussed various levels of coverage with Peltier, who ultimately decided $500,000 coverage for personal property was adequate.
Nacsa proposed two changes to Paper Savers' existing coverage. First, he recommended Peltier purchase business interruption insurance for Paper Savers which it did not have before. Second, Nacsa recommended a policy containing a "replacement cost coverage" endorsement with a policy limit of $500,000. In his declaration Nacsa explained this endorsement meant damaged property may be replaced with either used or new equipment, whichever is available, up to policy limits. Nacsa stated that under this type of policy, the maximum liability Truck could incur would be the limit of $500,000. Nacsa explained a "replacement cost coverage" endorsement differs substantially from a "guaranteed replacement cost coverage" endorsement. With the latter type of policy, lost or damaged property can be replaced with new property without cost limitation and therefore could theoretically exceed policy limits.
Peltier ultimately purchased several Truck insurance policies through Nacsa, including a $500,000 policy with the "replacement cost coverage" endorsement to insure against losses to Paper Savers' personal property.
Peltier's version of the factual circumstances surrounding the purchase of the Truck insurance policy differs substantially from Nacsa's.
Peltier was personally responsible for purchasing insurance for Paper Savers for the first time in 1988. In that year he purchased $200,000 in personal property insurance coverage through the Canadian Insurance Company. When Nacsa proposed he purchase a policy through Truck instead Peltier told Nacsa Paper Savers had since purchased additional machinery, refurbished other machinery and therefore required greater coverage than it had under the prior policy. He did not ask Nacsa to appraise or inventory Paper Savers' personal property nor request Nacsa's advice on the amount of total coverage Paper Savers required.
Before agreeing to purchase a Truck policy Peltier and Nacsa discussed the "replacement cost coverage" endorsement. Peltier testified he was not sophisticated in insurance matters and relied on Nacsa's expertise. According to Peltier, Nacsa told him the "replacement cost coverage" endorsement was an "extra binder" for which Paper Savers would have to pay an additional premium. Nacsa represented this endorsement and extra binder would provide full coverag
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