In Zup’s of Babbitt-Aurora, Inc. v. West Bend Mutual Insurance Co., the issue was which insurer was responsible for the insured’s lost income following a fire which destroyed its store and adjacent shopping mall. Zup’s had a supermarket in a strip mall; and also owned and leased other space in the mall. Zup’s lost income from its supermarket as well as rent from its tenants. Zups made claims for lost income to Security and West Bend. The parties agree that Security National’s policy covered Zup’s lost supermarket income and West Bend’s policy covered Zup’s lost rent. The question was whether West Bend is also responsible for Zup’s lost supermarket income.
After the insurers filed cross-motions for summary judgment, the district court first concluded that West Bend’s policy covered the lost supermarket income. It next held that reformation was unwarranted. Finally, the court held that even though both policies covered the lost supermarket income, Minnesota law made only Security National responsible for it. The Eighth Circuit affirmed.
Applying either the “closeness to the risk” test or the “total policy insuring intent” test, Security National’s coverage of lost income from the supermarket was the primary coverage and West Bend only had liability if Security National’s coverage was exhausted; since it is undisputed that Security’s coverage was not exhausted, Security was responsible for the insured’s lost supermarket income.