## Facts

- Atwater Creamery Company operated a creamery and a farm-chemical business in Atwater, Minnesota.
- Atwater purchased a “Mercantile Open Stock Burglary Policy” from Western National Mutual Insurance Company with a $20,000 burglary limit.
- The policy used a technical definition of “burglary” requiring “evidence of forcible entry,” typically shown by visible marks.
- Between April 9 and April 11, 1977, chemicals worth about $15,586 were stolen from Atwater’s storage building.
- After the theft, two of three storage-bin doors were open; padlocks were missing; and a turnbuckle on one door had been loosened, but there were no visible exterior marks of forced entry.
- Western denied the claim, asserting the loss did not meet the policy’s “forcible entry” definition.
- Atwater sued Western for coverage and sued its insurance agent (Strehlow Insurance Agency and Charles Strehlow) in the alternative for negligence/misrepresentation in failing to obtain adequate coverage and failing to advise of the limitation.
- The trial court ruled for Western on coverage and granted a directed verdict for Strehlow, concluding Atwater failed to prove the agent’s standard of care without expert testimony.

## Issues

1. Whether a burglary policy’s technical “forcible entry/visible marks” definition, operating as an effective exclusion, may be enforced to deny coverage contrary to the insured’s reasonable expectations.
2. Whether a policy conformity clause required substituting Minnesota’s statutory burglary definition for the policy’s narrower contractual definition.
3. Whether expert testimony was required to establish the standard of care for an insurance agent in a negligence claim alleging failure to advise or procure adequate coverage.

## Decision

- The Minnesota Supreme Court affirmed in part and reversed in part.
- It reversed judgment for Western, holding the policy’s technical burglary definition could not be applied to defeat Atwater’s reasonable expectations where it functioned as an exclusion from purported “burglary” coverage.
- It rejected Atwater’s conformity-clause argument, holding the clause substitutes statutory provisions only when a policy term directly conflicts with a statute; no direct conflict existed here.
- It affirmed the directed verdict for Strehlow, holding expert testimony was required to establish the insurance agent’s standard of care under the circumstances presented.

## Legal Principles

- A conformity clause substitutes a statutory provision for a policy provision only when the policy provision directly conflicts with the statute.
- When a technical definition in an insurance policy effectively operates as an exclusion from the coverage an ordinary purchaser would reasonably expect based on the policy’s label and apparent purpose, the definition will not be interpreted to defeat those reasonable expectations.
- In a negligence action against an insurance agent for failure to act, expert testimony is required to establish the applicable standard of care when the insured made no specific coverage request and there is no evidence of a settled course of dealing imposing an affirmative advisory duty on the agent.

## Conclusion

The court required coverage for the burglary loss by construing the policy consistent with the insured’s reasonable expectations despite a restrictive “visible marks” definition, held the conformity clause did not import the criminal burglary statute absent direct conflict, and upheld dismissal of the agent claim for lack of expert proof of the agent’s standard of care.


Atwater Creamery Co. v. W. Nat'l Mut. Ins. Co., 366 N.W.2d 271 (Minn. 1985)