Penman v. St. Paul Fire & Marine Insurance

Background

A woman insured a large boarding-style building to be rented as miners’ dwellings. The building burned after an explosion that witnesses said began when tenants set off lighted “squibs.” The homeowner sued to recover the policy amount. The written policy excluded various explosives and said only a written endorsement could change its terms. At trial a jury found for the homeowner, but an appeals court reversed and the case reached this Court.

Reasoning

The Court addressed two questions: whether blasting powder fits the policy’s phrase “other explosives,” and whether the insurer’s agent could undo that rule by word or conduct. The Court agreed with the appeals court that blasting powder is an explosive the policy intended to exclude and that the written exclusion controlled. The Court also held that the policy plainly required any change to be written, so the agent’s knowledge, increased rate, or oral conduct could not waive the exclusion.

Real world impact

As a result, the insurer can deny this fire claim because blasting powder fell within the policy’s prohibition. The decision emphasizes that clear written exclusions bind insureds and that agents cannot override written policy terms by informal acts or oral statements. Tenants or homeowners who store blasting powder risk losing insurance coverage for fires connected to it.

Dissents or concurrances

A judge in the lower court had contended blasting powder might be excluded by custom, usage, or the agent’s conduct and urged letting a jury decide; the Supreme Court rejected that approach.