## Facts

- C & J Fertilizer, Inc. operated a fertilizer plant in Olds, Iowa, insured under two Allied Mutual Insurance Company policies providing burglary coverage.
- The policies defined “burglary” as a felonious taking from within the premises by a person making felonious entry “by actual force and violence,” with “visible marks” or “physical damage” caused by tools (or other listed means) “upon, or physical damage to, the exterior of the premises at the place of such entry.”
- Employees left the plant on Saturday with exterior doors locked; on Sunday an employee found the plant locked and secure.
- On Monday, employees found the exterior doors locked but an interior front office door unlocked; property was missing.
- Truck tire tread marks were found near a plexiglass warehouse door that could be forced open without leaving exterior marks or exterior damage.
- No visible tool marks or physical damage appeared on the exterior of the building at any entry point.
- Inside the premises, a locked interior chemical-storage room showed physical damage and visible tool marks on its door; chemicals and equipment were taken (approximately $9,582 in chemicals and $400.30 in equipment).
- Allied denied coverage because the loss did not meet the policy’s “burglary” definition due to the absence of visible marks or damage on the exterior.
- The insurer’s agent told C & J that burglary coverage required “visible evidence” of burglary, but did not explain the technical limitation that the marks had to be on the exterior at the place of entry.

## Issues

1. Whether an insurance policy’s burglary definition requiring visible marks or damage on the exterior at the place of entry is enforceable when the loss is plainly caused by an outside burglar but exterior marks are absent.
2. Whether, in a standard-form insurance contract, the insured’s reasonable expectations can defeat a technical, non-negotiated limitation that substantially negates the apparent purpose of burglary coverage.

## Decision

- The Iowa Supreme Court reversed the judgment for Allied and remanded.
- The court held that enforcing the exterior-marks requirement to deny coverage in these circumstances was not permissible because it violated the insured’s reasonable expectations under an adhesion insurance contract.
- The court concluded there was substantial evidence of a genuine, outsider burglary (circumstantial proof and interior forced damage), and the absence of exterior marks did not justify applying the technical limitation to defeat coverage.

## Legal Principles

- Standard-form insurance policies are adhesion contracts; courts give weight to the reasonable expectations of the non-drafting insured with respect to non-negotiated terms.
- Courts may refuse to enforce boilerplate limitations that are bizarre or oppressive, negate the policy’s apparent purpose, or defeat coverage an ordinary insured would reasonably believe was purchased.
- An insurer seeking to materially limit apparently broad coverage must do so in a manner reasonably clear to the insured; obscure technical wording in fine print may not be used to defeat reasonable expectations.
- A restrictive policy definition of a common coverage term (such as “burglary”) may be unenforceable as applied when it functions as a technical trap inconsistent with common understanding and the transaction’s apparent object.

## Conclusion

The court held that, despite the absence of exterior entry marks, the insured reasonably expected burglary coverage for a loss strongly indicating an outside break-in; the insurer could not rely on a technical exterior-marks requirement in boilerplate to deny coverage, and the case was reversed and remanded for further proceedings.


C & J Fertilizer, Inc. v. Allied Mut. Ins. Co., 227 N.W.2d 169 (Iowa 1975)