The Minnesota Supreme Court issued an important decision last week in Great Northwest Insurance Company v. Campbell, 1 reaffirming and clarifying the scope of ordinance and law provisions and the obligations of insurers under replacement cost coverage for partial property losses to pay for those. In this case, the court held that when storm-damaged shingles could not be replaced without first installing new sheathing to comply with the building code, the cost of that sheathing must be covered, even if the underlying decking itself was not physically damaged by the storm. The court further held that the policy’s exclusion for contractor overhead and profit was enforceable, but only because the insured failed to show that such costs were a required part of bringing the damaged property into code compliance.
This case invites careful study of the 2022 decision in St. Matthew’s Church of God & Christ v. State Farm Fire & Casualty Company. 2 In St. Matthew’s, the court declined to extend coverage to preexisting masonry cracks that the City of St. Paul required to be repaired before storm-damaged drywall could be replaced. There, the court found no coverage because the masonry was not itself damaged by the storm and its repair was not integral to the code-compliant replacement of the drywall. Campbell, in contrast, required coverage for the sheathing because it was a direct prerequisite to the code-compliant replacement of the damaged shingles.
Policyholders, public adjusters and insurance claim professionals who wish to fully understand Minnesota’s approach to code-compliance coverage should carefully compare these two decisions, as the distinction between them will shape the handling of future Minnesota property claims. These are significant coverage interpretations which will routinely be involved when handling claims in Minnesota.
I want to note that the outcome in Campbell was supported by a powerful amicus brief filed by United Policyholders (UP). UP is a nonprofit that consistently champions the interests of insurance consumers through various projects. Their submission to the court highlighted the public policy reasons why code-compliance costs triggered by a covered loss must be indemnified to keep property owners whole and to ensure that insurance fulfills its essential promise of security. UP’s voice highlights the importance of consumer-focused advocacy in cases that will affect millions of Minnesota policyholders.
The Campbell decision also shines a light on an ongoing issue that many policyholders, insurance agents and brokers, and insurance regulators may overlook: the creeping inclusion of fine print exclusions for overhead and profit and other repair costs in property policies. While small in appearance, these exclusions can have large financial consequences, leaving insureds with unexpected gaps in coverage for routine components of the repair process. Most of these provisions are often buried in the fine print and sometimes as additional coverages when they are truly limitations of coverage.
Insurance regulators should take a harder line against these small but significant policy changes that alter the balance of the insurance marketplace. As policy language evolves incrementally, the net effect can be a substantial reduction in coverage that the average consumer never anticipates, agents fail to catch and then threaten the reliability of insurance as a financial safety net. This issue is about trust in the insurance product, which many insurers are now using small print to gain a competitive advantage and subtle claim cost reduction.
Campbell reinforces that Minnesota courts continue to recognize that replacement cost coverage under § 65A.10 must include the full cost of repairing the damaged portion of property in compliance with code, even if that requires work on undamaged materials directly implicated in the repair process. Second, the market is shifting underfoot as insurers deploy Campbell-like exclusions and endorsements that may quietly narrow the scope of replacement cost coverage.
Christina Phillips heads up Merlin Law Group’s work in Minnesota. For those with specific claims issues and problems in “The Land of 10,000 Lakes,” I suggest you contact Christina directly.
Thought For The Day
“There’s something about Minnesota that’s just grounded. People are nice. The air is fresh. Life feels simple and good.”
– Jessica Lange
1 Great Northwest Ins. Co. v. Campbell, No. A23-0519 (Minn. July 30, 2025).
2 St. Matthew’s Church of God & Christ v. State Farm Fire & Cas. Co., 981 N.W.2d 760 (Minn. 2022).