Bergren v. Premier Insurance

Opinion

DRAPER, P. J. Plaintiffs' assignor commenced construction of a 30-unit condominium at Lake Tahoe, and secured a standard fire insurance policy from defendant. During construction, a fire damaged the building. Defendant insurer paid plaintiffs the actual cost of physical [275]repair needed to restore the building to its condition at the time of the fire. The owners, however, had borrowed money to finance the original construction. They claimed that their insurance coverage extended to the amount of interest accrued upon the construction loans during the period required for repair.

The policy provides that insurer “does insure the named insured ... to the extent of the actual cash value of the property at the time of the loss, but not exceeding the amount which it would cost to repair or replace the property with material of like kind and quality, . . . without compensation for loss resulting from interruption of business or manufacture, nor in any event for more than the interest of the insured, against all Loss By Fire . ...” A separate provision reads: “This policy insures against all risks of direct physical loss to . .. Buildingfs]....”

The fire caused less than total loss to the building under construction. Defendant insurer paid plaintiffs the cost of materials and labor in restoring the construction job to its condition immediately before the fire. It refused to pay any interest accrued upon the construction loans during the period of repair. Plaintiffs sought such interest in this action, and the trial court awarded them some $15,000 to cover that item. Defendants appeal.

Counsel cite no direct authority. We find no California cases and little elsewhere upon this point. Respondents rely heavily upon a decision (Geddes & Smith, Inc. v. St. Paul Mercury Indem. Co., 63 Cal.2d 602 [47 Cal.Rptr. 564, 407 P.2d 868]). But that decision concerns a different form of policy covering a risk wholly distinct from that here in issue, and we cannot find it helpful upon the question before us.

No extrinsic evidence was introduced at trial to aid in the construction of the policy before us. Hence, only a question of law is presented here, and we are free to make independent determination of the policy’s meaning as deduced from pertinent provisions on its face. (Argonaut Ins. Co. v. Transport Indem. Co., 6 Cal.3d 496, 502 [99 Cal.Rptr. 617, 492 P.2d 673].)