## Facts

- Midwest Office Technology, Inc. purchased business personal property insurance from American Alliance Insurance Company with a stated maximum liability limit of $600,000.
- The policy was written on a monthly reporting form requiring Midwest to submit monthly reports of inventory values; premiums and coverage varied based on reported values.
- The policy’s reporting clause limited coverage, upon failure to file required reports, to “not more than the amounts included in the last report of values prior to the loss.”
- Midwest did not consistently comply with the reporting requirement.
- Midwest’s last pre-loss report listed inventory value at $478,619.
- A fire destroyed Midwest’s inventory; the actual inventory value at the time of loss exceeded $600,000.
- Midwest demanded the full $600,000 limit; American paid $478,619 and denied additional liability based on the reporting clause.

## Issues

1. Whether, under a monthly reporting form policy, an insured that fails to comply with reporting requirements may recover the full stated policy limit when the actual loss exceeds both the last reported value and the policy’s maximum limit.
2. Whether the policy’s reporting clause unambiguously limits recovery to the amount in the last pre-loss report.

## Decision

- The Iowa Supreme Court reversed the trial court’s judgment for Midwest.
- The court held American’s liability was limited to $478,619, the amount stated in Midwest’s last report before the fire.
- The court enforced the reporting-clause limitation as written and rejected Midwest’s claim to the $600,000 maximum limit.

## Legal Principles

- In a monthly reporting insurance policy, the effective coverage at the time of loss is determined by the insured’s reported values, subject to the policy’s stated maximum limit.
- A clause limiting recovery to the amount shown in the last report of values prior to loss is enforceable when its language is clear.
- The declarations-page maximum limit functions as a cap on possible coverage, not a guarantee of that amount regardless of reporting compliance.
- Contra proferentem applies only where policy language is ambiguous; courts will not expand coverage by re-writing an unambiguous reporting limitation tied to premium and risk allocation.

## Conclusion

Because the reporting clause unambiguously limited coverage to the last reported inventory value and Midwest’s last pre-loss report stated $478,619, Midwest could not recover the $600,000 maximum limit despite a loss exceeding that amount, and the insurer owed no more than $478,619.


Midwest Office Tech., Inc. v. Am. All. Ins. Co., 437 N.W.2d 555 (Iowa 1989)