Hickman vs. Safeco Insurance Company of America

(Minnesota,May 5, 2005)
—Ruling: Borrower is intended third-party beneficiary under fire policy

Borrower under a mortgage brought action against insurer alleging that he was an intended third-party beneficiary of a fire and windstorm policy between the mortgage company and the insurer. After the borrower failed to provide proof of insurance as required by his mortgage agreement, his mortgage company purchased a fire and windstorm policy from the insurer. The borrower’s home was damaged by a windstorm and he was denied coverage under the policy. The court held that the borrower was an intended third-party beneficiary of the policy because the policy recognized the class of persons of “borrowers,” provided coverage in excess of the mortgage company’s interest and for loss of personal property, provided excess payment directly to the borrower, and gave the borrower certain rights related to contesting a loss appraisal.