Opinion ID: 398287
Heading Depth: 1
Heading Rank: 4

Heading: The Deductible Clause

Text: 47 The appellant's last argument is even if coverage existed under the policy, it was subject to a deductible of $100.00 for each individual claim of damage. 48 The facts relevant to this issue are easily summarized. It is undisputed the policy issued to the appellee contains the deductible clause. The clause is unambiguous on its face. The policy was delivered to the appellee on November 14, 1977, some time after the damage had occurred. When the appellee sought insurance coverage he was issued a binder of insurance on August 5, 1977, by an independent insurance agent. That binder did not contain a reference to the deductible. The record contains evidence that it was normal, customary and usual for all of the appellant's commercial comprehensive insurance policies to have a deductible in some amount. 49 The district court posed to the jury the question of whether the appellee had reasonably expected his insurance coverage to be subject to a deductible. Upon receiving an answer in the negative, the district court found the coverage was not subject to a deductible. 50 We disagree with the method used by the court in reaching this conclusion. 51 The general rule established long ago in Minnesota, and consistent with the rule in other jurisdictions 13 , is that insurance created by a binder is controlled by and subject to the terms and conditions of policies ordinarily issued by the insurance company for similar risks. Salisbury v. Hekla Fire Insurance Co., 32 Minn. 458, 21 N.W. 552 (1884). 52 However, if the agent issuing the insurance policy has the authority, actual or apparent, to alter the usual terms of the policy, the insurer should be bound by such alteration. Morrison v. Swenson, 274 Minn. 127, 142 N.W.2d 640 (1966); see also Salisbury v. Hekla Fire Insurance Co., supra, 21 N.W. at 553. 53 The insurance policy issued by the appellant clearly contained a deductible clause which the evidence indicates was an ordinary term in its policies issued for risks of this type. For the deductible to be held inoperative on this record, it must be shown first that the issuing agent was acting as an agent for the appellant with the authority, actual or apparent, to alter the terms of the appellant's ordinary policy, and, secondly, the issuing agent and the appellee agreed to alter the terms of the policy by excluding the deductible clause. 54 The scope of the agent's authority to act on behalf of the insurer is a question of fact to be determined by the evidence. Automated Systems v. National Indemnity Co., 269 N.W.2d 749, 752 (Minn.1978). (See this case for a discussion of the factors relevant to a determination of the scope of authority.) 55 On remand the district court should determine the validity of the deductible in accordance with the guidelines set forth above. 56 For the above reasons, this action is remanded to the district court for a new trial in accordance with this opinion.