Conifer Insurance Co. has been ruled exempt from providing coverage for fire damage at a Michigan property used for marijuana cultivation, according to a recent decision by a state appeals court. The court found that the property owner, 23771 Blackstone LLC, did not comply with the policy's requirement for an automatic extinguishing system, leading to the denial of their insurance claim.
The ruling, delivered by a unanimous three-judge panel, supported Conifer's decision to deny coverage. This decision came despite Blackstone's argument that Conifer, aware of the property's lack of a suitable extinguishing system through its inspections, should not be allowed to refuse coverage. The court highlighted that the inspection reports were intended for Conifer's use and did not imply any agreement or understanding that would obligate Conifer to cover the damages despite non-compliance.
The property, located in Warren, Michigan, suffered a fire in June 2020. Conifer had issued an insurance policy to Blackstone in 2017, which was renewed annually. The policy included a clause necessitating an automatic extinguishing system, described as any system with connected sprinklers, discharge nozzles, ducts, valves, pumps, and tanks.
Blackstone contended that Conifer couldn't deny coverage because the insurer was aware of the absence of such a system. However, the court noted that the policy's specific terms indicated that the presence of an automatic extinguishing system was a fundamental condition of the insurance. The panel emphasized that any changes to the policy terms would require an official endorsement from Conifer, which was not present in this case.
Moreover, the court stated that while Michigan law allows for the reformation of insurance policies to reflect the actual agreement between parties, there was no evidence suggesting a mutual understanding that an extinguishing system was not required for coverage.
The panel comprised Judges Mark T. Boonstra, Michael F. Gadola, and Allie Greenleaf Maldonado, who collectively upheld the trial court's summary judgment in favor of Conifer Insurance Co.
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