Opinion ID: 1237533
Heading Depth: 2
Heading Rank: 2

Heading: Reasonable-Expectation Doctrine

Text: The Hubreds argue that the courts below erroneously failed to apply the reasonable-expectations doctrine as enunciated by this court in Atwater Creamery Co. v. Western Nat'l. Mut. Ins. Co., 366 N.W.2d 271 (Minn.1985). In Atwater we said, because of the unique circumstances surrounding a layperson's purchase of insurance, the 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. Id. at 277. (quoting Keeton, Insurance Law Rights at Variance with Policy Provisions, 83 Harv.L.Rev. 961, 967 (1970)). The doctrine 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. See Id., at 278. Other factors to be considered 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. See Id. at 277, 278. In short, the doctrine asks whether the insured's expectation of coverage is reasonable given all the facts and circumstances. It is true that nothing in our opinion in Atwater suggests that the doctrine of reasonable-expectations is not to be applied except in the presence of peculiar circumstances such as ambiguity or a hidden exclusion. The Hubreds, however, point to no facts or circumstances which, despite the clear import of the exclusion, would justify a reasonable expectation of coverage in this case. The fact that the Hubreds were not orally informed of the exclusion does not, standing alone, free them of the responsibility of having read the exclusion at least as it appeared in the handbook. Thus, in light of the unambiguous exclusion there was no reasonable expectation of coverage in these circumstances. Affirmed.