Refusing to Take Denied for an Answer: Minnesota businesses overturn insurance coverage denials in court

Trevor S. Johnson

This article was originally published on Jan 27, 2026, in Bench & Bar of Minnesota:

Refusing to Take Denied for an Answer

Minnesota businesses often rely on insurance coverage when an unexpected loss occurs. But according to one recent insurance industry study, business insurance claims are often denied or left unpaid by the insurer. A 2024 report by a major claim administrator notes that more than 24 percent of general liability claims were denied and more than 50 percent were closed with zero dollars incurred.1 Minnesota businesses whose claims have been denied, left in limbo, or only partially paid often find themselves facing massive defense, investigation, and settlement costs at the worst possible time.

A red stamp with the word "DENIED" in bold, distressed lettering.

Options after denial or coverage limitation

The Minnesota Supreme Court has held that the “provisions of an insurance policy are to be interpreted according to plain, ordinary sense so as to effectuate the intention of the parties.”2 This guidance sounds simple, but insurance policies are complicated. After a denial, policyholders may feel like they are watching Christopher Nolan’s film Inception as they dig through layers of interrelated defined terms, exceptions to exclusions to coverages, and endorsements. Judge Paul Magnuson once observed that certain frequently litigated policy provisions “appear to be drafted to intentionally obscure coverage decisions[.]”3

Insurance coverage denials are not set in stone and insurers may reverse their position when presented with legal analysis of the policy provisions, a better framing of the relevant facts, or both. In other cases, the insured may be forced to pursue a first-party action against the insurer in court. Insurance claims are frequently litigated. LexisNexis reports that in 2023, more than 17,000 insurance cases were filed in federal district courts and insurance companies “dominated the lists of the most active plaintiffs and the most active defendants.”4

Courts across the country have long acknowledged that insurance contracts are unlike ordinary commercial agreements. Policies are written by insurers, packed with exclusions, conditions, and endorsements, and, in many cases, presented to policyholders on a take-it-or-leave-it basis. Accordingly, courts apply powerful interpretive rules in the policyholder’s favor, such as reading exclusions narrowly, construing ambiguities against the insurer, and finding that the duty to defend is triggered whenever there is even a possibility of coverage. Yet these doctrines are not self-executing. In case of an initial denial or delay, it may take an attorney pressing the argument, line by line, to make sure they are enforced.

Minnesota courts rule in favor of insurance coverage

Three recent insurance coverage cases in Minnesota courts illustrate different ways in which insurers seek to deny or limit coverage—and different strategies for responding.

Great Northwest Insurance Co. v. Campbell

On July 30, 2025, the Minnesota Supreme Court issued its ruling in Great Northwest Insurance Co. v. Campbell.5 A hailstorm damaged the roof of Campbell’s home and the insurer approved removal and replacement of the damaged shingles. After removing the existing shingles, the roofer found that the roof decking was not compliant with the state building code and new shingles could not be applied without first adding a layer of sheathing. The insurer denied coverage for the installation of the sheathing based on a policy endorsement that stated there “is no coverage for” the repair or replacement of “any layer of roofing material, including ‘decking,’ beneath the outermost layer.” Campbell successfully argued to the Supreme Court that Minnesota Statute §65A.10, which requires insurance to cover the cost of repair and replacement “in accordance with the minimum code,” invalidated the policy endorsement. Agreeing with Campbell, the Supreme Court held that “when a term in an insurance contract contravenes a requirement of Minnesota statute, the contract term is unenforceable”6 and that the cost of installing the sheathing was part of the cost of repairing or replacing the damaged shingles in accordance with code. Thus, the policy endorsement was invalidated.

This case illustrates that a court may overrule the specific terms of an insurance policy and find coverage despite an initial denial of coverage.

Life Time, Inc. v. Zurich Am. Ins. Co.

On August 11, 2025, the Minnesota Court of Appeals ruled in Life Time, Inc. v. Zurich Am. Ins. Co. finding coverage for damages sustained by Life Time when it was forced to close gym locations during the Covid-19 pandemic.7 In 2020, Life Time closed various gyms in different locations at different times, starting with two locations in March and ultimately closing all 150 locations nationwide by early April. Reopening schedules varied. Life Time identified 41 different government shutdown orders in 29 different jurisdictions that affected its operations and submitted claims to its insurer.

The policy in question specifically covered business interruption due to “communicable disease” if the suspension of business operations was “caused by order of an authorized government agency[.]” The policy limited damages to $1 million per occurrence (all losses attributable to “one cause or a series of similar or related causes”). The parties did not dispute that Life Time experienced a covered loss. However, the insurer claimed that the closures in all locations nationwide were part of the same “occurrence” (arguing that the closures all shared the same “cause”—the pandemic itself), and determined that Life Time’s coverage for its losses across all locations was capped at $1 million. Life Time argued that the “cause” for each closure was the shutdown order issued by the particular jurisdiction, and claimed that there were 41 occurrences.

The Minnesota Court of Appeals agreed with Life Time that the government orders, and not the pandemic itself, were the causes of the closures. But the court found that multiple orders within the same jurisdiction constituted a “series of similar or related causes.” Accordingly, the court held that there had been 29 causes—one for each jurisdiction.

This case illustrates the complexity of determining the “plain, ordinary” meaning of the terms in an insurance policy, as the decision ultimately turned on interpretation of seemingly simple terms like “cause.”

African Economic Development Solutions, Inc. v. West Bend

On June 11, 2025, the U.S. District Court for the District of Minnesota found coverage for the insured (AEDS) in Afr. Econ. Dev. Sols. v. W. Bend Mut. Ins. Co.8 Here, an intentionally set fire (aka arson) damaged a vacant building owned by AEDS. The policy at issue covered all “direct physical loss unless the loss is excluded or limited in this policy.” The policy contained a state-specific endorsement including coverage for “all loss or damage caused by fire” unless excluded or limited. The policy also contained a “vacancy provision” which provided that if the building where the loss occurs has been vacant for more than 60 days, there is no coverage for “vandalism.” Notably, in other parts of the policy where different types of damage are enumerated, “vandalism” and “fire” are listed separately (the policy, for example, discusses property in transit coverage, which provides coverage for damages caused by “fire… explosion… civil commotion, or vandalism”).

The question before the court was whether the fire constituted “vandalism.” The insurer, arguing that the plain language of the vacancy provision excluded coverage, pointed to the dictionary definitions of vandalism (the “willful or ignorant destruction of public or private property”) and arson (“intentionally or recklessly destroying or damaging property by setting fire to it”). The court granted that, at “first blush, West Bend’s plain-language argument seems persuasive,” and acknowledged the “substantial overlap between those two definitions.” The court went so far as to find that “looking no further than the terms themselves… it would seem logical to conclude that damage from an intentionally set fire—that is, arson—is damage from ‘vandalism.’”

But, the court noted, “plain, ordinary sense” is not the only thing guiding interpretation of insurance contracts in Minnesota. Insurance policies must also be interpreted according to “what a reasonable person in the position of the insured would have understood the words to mean.”9 Moreover, where there is any ambiguity (that is, where there is more than one reasonable interpretation), the “insurer’s reading must give way to the insured’s.”10

The court found that, because other provisions in the policy refer to “fire” and “vandalism” separately, the vacancy provision’s exclusion of coverage for vandalism was ambiguous. The court noted that the insurer, as drafter of the policy, could have defined vandalism to include arson, but did not. Therefore, construing the ambiguity in favor of the insured and construing exclusions narrowly, the court found that the policy did provide coverage for the loss.

This case illustrates how even a denial based on seemingly plain language in the policy may be overcome, due to rules of construction that are favorable to policyholders and the general principle that policy interpretation must consider the insured’s reasonable expectations of coverage.

Conclusion

These three Minnesota cases in recent months demonstrate that policyholders should consider hiring coverage counsel when their claims are denied. As demonstrated by Life Time—where the court found the coverage limit to be 29 times higher than the amount claimed by the insurer—the impact of overcoming a denial may be massive.

Trevor S. Johnson is an attorney with the Minnesota law firm Rossman Kirk, PLLC who has successfully represented several Minnesota companies recently in securing insurance coverage and payments after insurance claim denials. He represents local builders and contractors in construction disputes in addition to representing creditors and debt collectors. He received his undergraduate degree from the University of Northwestern-St. Paul and his JD from the University of St. Thomas School of Law.

Notes

1 Sedgwick, State of the Line: Casualty, General Liability (Summer 2024), retrieved from https://www.sedgwick.com/stateoftheline/casualty-generalliability-summer2024/ (last accessed 9/12/2025).

2 Canadian Universal Ins. Co. v. Fire Watch, Inc., 258 N.W.2d 570, 572 (Minn. 1977).

3 Westfield Ins. Co. v. Miller Architects & Builders, Inc., No. CV 17-400 (PAM/LIB), 2018 WL 495652, at *1 (D. Minn. 1/19/2018), judgment entered, No. CV 17-400 (PAM/LIB), 2018 WL 3831347 (D. Minn. 8/13/2018), and aff’d sub nom. Westfield Ins. Co. v. Miller Architects & Builders, 949 F.3d 403 (8th Cir. 2020).

4 LexisNexis, Lex Machina Releases 2024 Insurance Litigation Report (6/13/2024), retrieved from https://www.lexisnexis.com/community/pressroom/b/news/posts/lex-machina-releases-2024-insurance-litigation-report (last accessed 9/12/2025).

5 Great Nw. Ins. Co. v. Campbell, 24 N.W.3d 256 (Minn. 2025).

6 Quoting Streich v. Am. Fam. Mut. Ins. Co., 358 N.W.2d 396, 399 (Minn. 1984).

7 Life Time, Inc. v. Zurich Am. Ins. Co., No. A24-1501, 2025 WL 2301277, ___ N.W.3d ___, (Minn. Ct. App. 8/11/2025).

8 No. 24-CV-459 (LMP/TNL), 2025 WL 1651214, at *3 (D. Minn. 6/11/2025).

9 Quoting Farmers Home Mut. Ins. Co. v. Lill, 332 N.W.2d 635, 637 (Minn. 1983).

10 Id