STATE OF MINNESOTA
IN SUPREME COURT
A23-0519
Court of Appeals Moore, III, J. Took no part, Gaïtas, J. Great Northwest Insurance Company,
Appellant/Cross-Respondent,
vs. Filed: July 30, 2025 Office of Appellate Courts Hector A. Campbell,
Respondent/Cross-Appellant,
Betty L. Campbell,
Defendant. ________________________
Christopher A. Wills, RGP Law Ltd., Saint Cloud, Minnesota, for appellant/cross- respondent.
Edward E. Beckmann, Beckmann Law Firm, LLC, Bloomington, Minnesota; and
Thomas J. Okoneski, Okoneski Law Firm, LLC, North Saint Paul, Minnesota, for respondent/cross-appellant.
Dale O. Thornsjo, Lance D. Meyer, O’Meara Wagner, P.A., Minneapolis, Minnesota, for amicus curiae The Insurance Federation of Minnesota.
Timothy D. Johnson, Alexandra J. Anderson, Smith Jadin Johnson, PLLC, Bloomington, Minnesota, for amicus curiae United Policyholders.
Beth A. Jenson Prouty, Harrison E. Berg, Arthur, Chapman, Kettering, Smetak & Pikala, P.A., Minneapolis, Minnesota, for amicus curiae American Property Casualty Insurance Association.
________________________
1 SYLLABUS
1. When roof shingles are damaged in a storm and, under applicable state code
provisions for shingle installation, the shingles cannot be replaced without first installing a
new layer of sheathing, Minnesota Statutes section 65A.10, subdivision 1 (2024)—which
mandates that replacement cost insurance include the cost of replacing, rebuilding, or
repairing damaged property in compliance with the minimum code requirements imposed
by state or local authorities—requires a replacement cost insurer to cover the cost of
installing the sheathing.
2. Minnesota Statutes section 65A.10, subdivision 1, does not obligate an
insurer to pay for overhead and profit costs unless the insured establishes that those costs
constitute part of the “cost of replacing, rebuilding, or repairing any loss or damaged
property in accordance with the minimum code as required by state or local authorities.”
Affirmed.
OPINION
MOORE, III, Justice.
This appeal arises from a dispute over insurance coverage for storm-related roof
repairs. Respondent/cross-appellant Hector Campbell’s home was insured under a
replacement cost insurance policy provided by appellant/cross-respondent Great Northwest
Insurance Company (Great Northwest). After a hailstorm damaged the shingles on
Campbell’s roof, Campbell hired a contractor to conduct repairs. While replacing the
damaged shingles, the contractor discovered that the roof’s decking had gaps between the
2 wood planks larger than permissible under state code governing the installation of the
replacement shingles. The contractor installed a new layer of oriented strand board
sheathing on top of the deficient decking and affixed the new shingles to the new sheathing.
Because Campbell’s insurance policy excluded coverage for roofing repairs beneath the
outermost layer of roofing material, as well as coverage for overhead and profit in all cases
except those involving fire and lightning, Great Northwest denied coverage for the
contractor’s installation of the new layer of sheathing material and for the contractor’s
overhead and profit.
Great Northwest brought a declaratory judgment action to determine its coverage
obligations. The district court determined that the insurer’s denial of coverage for the
sheathing violated Minn. Stat. § 65A.10, subd. 1 (2024), which requires, in the event of a
partial loss, replacement cost insurance to cover the cost of replacing or repairing the
damaged portion of the property “in accordance with the minimum code as required by
state or local authorities.” But the district court granted summary judgment to Great
Northwest on the overhead and profit issue, concluding that Campbell’s policy “clearly
and unambiguously” barred coverage for those costs. The district court thus granted Great
Northwest’s summary judgment motion in part and denied it in part. The court of appeals
affirmed on both issues.
We conclude that Minnesota Statutes section 65A.10, subdivision 1, requires Great
Northwest to provide coverage for the new sheathing because installing the sheathing was
a cost of replacing the damaged shingles in accordance with the state building code
governing shingle installation. Therefore, the limitation provision in Campbell’s policy
3 that excluded such coverage is invalid under the statute. We further conclude that Great
Northwest may deny coverage for overhead and profit here because Campbell failed to
establish that the contractor’s overhead and profit costs constitute part of the “cost of
replacing, rebuilding, or repairing any loss or damaged property in accordance with the
minimum code as required by state or local authorities.” Minn. Stat. § 65A.10, subd. 1.
Campbell therefore failed to show that the provision excluding coverage for overhead and
profit violates section 65A.10. Accordingly, we affirm the decision of the court of appeals.
FACTS
The facts here are undisputed. A hailstorm damaged the roof of Campbell’s Saint
Paul home in May 2022. 1 The home was insured under a homeowner’s replacement cost
insurance policy issued by Great Northwest. After an adjuster confirmed the damage,
Great Northwest approved the removal and replacement of the damaged shingles.
Campbell hired a contractor to replace the damaged shingles. When the contractor
removed the damaged shingles, the contractor discovered that Campbell’s roof decking
(the layer of wood to which the shingles were affixed) had gaps exceeding one-fourth of
an inch. These gaps were significant because the shingle manufacturer’s installation
instructions—which roofing installers must follow under the state building code 2—
1 Hector Campbell and his wife, defendant Betty Campbell, owned the home at the time of the storm. Mrs. Campbell has since passed away. 2 For its building code, Minnesota has incorporated by reference the 2018 International Building and Residential Codes. See Minn. R. 1305.0011, subp. 1 (2020) (adopting the international building code); Minn. R. 1309.0010, subp. 1 (2020) (adopting the international residential code). The term “state building code” in this opinion therefore
4 prohibited installing the shingles on decking with gaps greater than one-eighth of an inch.
As a result, the state code did not allow the contractor to install the replacement shingles
directly on Campbell’s existing roof decking. The contractor therefore installed oriented
strand board sheathing over the existing decking and affixed the new shingles to the new
sheathing. When the contractor submitted an invoice to Great Northwest for the roof
repairs, Great Northwest denied coverage for three costs: $5,600 for the installation of the
oriented strand board sheathing, $2,641 for the contractor’s overhead, and $2,641 for the
contractor’s profit.
Great Northwest brought a declaratory judgment action in Ramsey County District
Court, seeking to determine its coverage obligations under Minnesota law. Great
Northwest moved for summary judgment, arguing that two provisions in Campbell’s
insurance policy explicitly disclaimed coverage for these costs. First, Great Northwest
cited to a “Roof Damage Limitation Endorsement” in Campbell’s policy, which stated that
Great Northwest would only pay for “direct physical loss” and not for “any layer of roofing
material . . . beneath the outermost layer.” This endorsement stated:
There is no coverage for and “we” will not pay for tear off, repair, removal, or replacement of any layer of roofing material, including “decking”, beneath the outermost layer. This limitation applies even if the tear off, repair, removal, or replacement of any layer of roofing material beneath the outermost layer or “decking” is necessary to repair, remove, or replace the
refers to the 2018 International Building Code and the 2018 International Residential Code, subject to the exceptions, amendments, and qualifications to those codes as stated in the administrative rules. See generally Minn. R. chs. 1305, 1309 (2020) (adopting certain amended provisions of the International Building and Residential Codes). Chapter 9 of the International Residential Code addresses “roof assemblies.” Int’l Residential Code §§ R901 to R908 (Int’l Code Council 2018); see also Minn. Rs. 1309.0903, .0905 (2020) (adopting amended sections of R903 and R905 of the Int’l Residential Code).
5 outermost layer of roofing material. This limitation also applies even if the tear off, repair, removal, or replacement of any layer of roof material, including “decking”, other than the outermost layer, is required by any law or ordinance, including any building code.
“We” do pay for direct physical loss to “decking” below all layers of roof material, if a covered peril causes the direct physical loss to the “decking” and the loss is not subject to any exclusions in the policy.
The roofing endorsement defined “decking” as “the wood, plywood, wood fiber, or other
material applied to the structure of a building or other structure and to which a roof
assembly is attached.” Because the gaps in the decking were not caused directly by the
storm, Great Northwest argued that this endorsement excluded coverage for installation of
the new sheathing.
Second, Great Northwest pointed to an “Overhead and Profit” Endorsement in
Campbell’s policy, which excluded coverage for “[o]verhead and profit on the materials
and labor associated with roofing or the roofing system” unless the damage was caused by
fire or lightning. The damage to Campbell’s roof was not due to fire or lightning, and
therefore, Great Northwest argued it had no obligation to provide coverage for the
contractor’s overhead and profit.
Campbell countered that section 65A.10—which requires replacement cost
insurance to cover, in the case of a partial loss, the “cost of replacing, rebuilding, or
repairing” the damaged portion of the property “in accordance with the minimum code as
required by state or local authorities”—encompassed both the sheathing cost and the
overhead and profit costs. Minn. Stat. § 65A.10, subd. 1. Therefore, Campbell argued, the
two policy endorsements were invalid because they conflicted with the statute.
6 The district court granted in part and denied in part Great Northwest’s motion for
summary judgment. The district court denied summary judgment as to the cost of the
sheathing, concluding that Great Northwest’s denial of coverage violates Minn. Stat.
§ 65A.10, subd. 1. The district court thus ordered Great Northwest to pay the $5,600
related to the roof decking. But the district court granted summary judgment to Great
Northwest as to the contractor’s overhead and profit. Great Northwest appealed on the
overhead and profit issue, and Campbell appealed on the sheathing issue. The court of
appeals affirmed the district court, Great Nw. Ins. Co. v. Campbell, 3 N.W.3d 59 (Minn.
App. 2024), and we granted review on both issues.
ANALYSIS
The question before us is whether Minn. Stat. § 65A.10, subd. 1, requires Great
Northwest to provide coverage for the cost of installing new sheathing over the existing
decking on Campbell’s roof, as well as the contractor’s associated overhead and profit.
Campbell argues that the statute requires coverage for these costs, such that the
endorsements in Campbell’s insurance policy disclaiming coverage for those costs are
unenforceable.
This case comes to us on appeal from summary judgment. Summary judgment is
appropriate when “there is no genuine issue as to any material fact and the movant is
entitled to judgment as a matter of law.” Minn. R. Civ. P. 56.01. On appeal, we determine
whether there are any genuine issues of material fact that preclude summary judgment and
whether the district court properly applied the law. St. Matthews Church of God & Christ
v. State Farm Fire & Casualty Co., 981 N.W.2d 760, 764 (Minn. 2022). We review a
7 district court’s summary judgment decision de novo. Id. The parties agree that the material
facts are not in dispute. Therefore, the only questions before us are the interpretation of
statutes and insurance contracts, which are questions of law we review de novo. Id.
“Insurance policies are contracts and, absent statutory provisions to the contrary,
general principles of contract law apply.” Remodeling Dimensions v. Integrity Mut. Ins.
Co., 819 N.W.2d 602, 611 (Minn. 2012). But “[t]he business of insurance is quasi public
in character; hence, it is competent for the state, in the exercise of the police power, to
regulate it for the protection of the public.” Ill. Farmers Ins. Co. v. Glass Service Co.,
683 N.W.2d 792, 802 (Minn. 2004) (citation omitted) (internal quotation marks omitted).
Thus, when a term in an insurance contract contravenes a requirement of Minnesota statute,
the contract term is unenforceable. Streich v. Am. Fam. Mut. Ins. Co., 358 N.W.2d 396,
399 (Minn. 1984).
The Roof Damage Limitation and Overhead and Profit endorsements in Campbell’s
insurance policy explicitly bar coverage for the sheathing and overhead and profit on these
facts. 3 We therefore must decide whether the statute governing replacement cost insurance,
Minnesota Statutes section 65A.10, subdivision 1, renders the two insurance provisions at
issue—the endorsements covering roof damage and overhead and profit—invalid.
3 Campbell argues that these facts did not trigger the coverage exclusion within the Roof Damage Limitation Endorsement. That said, the court of appeals concluded here that coverage for the sheathing installation was excluded under the plain language of the endorsement, Campbell, 3 N.W.3d at 65, and Campbell did not preserve this question in his petition for review. Therefore, Campbell forfeited the issue, and we adopt the court of appeals’ holding that the insurance policy itself disclaimed coverage for the sheathing. See In re GlaxoSmithKline PLC, 699 N.W.2d 749, 757 (Minn. 2005) (stating the presumption that “we do not address issues that were not raised in a petition for review”).
8 I.
We begin with the question of whether Minnesota Statutes section 65A.10,
subdivision 1, obligates an insurer offering replacement cost insurance to indemnify an
insured for the cost of installing new roof sheathing, where such sheathing is necessary to
allow damaged shingles to be replaced in compliance with applicable building codes
governing shingle installation. See Remodeling Dimensions, Inc. v. Integrity Mut. Ins. Co.,
819 N.W.2d 602, 616 (Minn. 2012) (“An insurer . . . has a duty to indemnify its insured by
paying a covered claim under the insurance policy.”). If the statute were to require such
coverage, the Roof Damage Limitation Endorsement would be invalid. Streich, 358
N.W.2d at 399 (“An insurer’s liability is governed by the contract between the parties only
as long as coverage required by law is not omitted and policy provisions do not contravene
applicable statutes.”).
Section 65A.10, subdivision 1, which addresses mandated code-compliant coverage
for a partial loss, provides:
Subject to any applicable policy limits, where an insurer offers replacement cost insurance: (i) the insurance must cover the cost of replacing, rebuilding, or repairing any loss or damaged property in accordance with the minimum code as required by state or local authorities . . . . In the case of a partial loss, unless more extensive coverage is otherwise specified in the policy, this coverage applies only to the damaged portion of the property.
In this case, the court of appeals concluded that section 65A.10, subdivision 1, requires
Great Northwest to cover the cost of installing the new sheathing. Campbell, 3 N.W.3d
at 67. The court of appeals concluded that “the damaged portion of Campbell’s property”
was the shingles, not any other layer of the roof. Id. But it concluded that replacing the
9 sheathing was a cost of replacing the damaged shingles under the statute, making coverage
mandatory. Id. at 65–66. The court of appeals reasoned that “it was not possible for a
roofer to install new shingles in accordance with the state building code” unless the new
sheathing was installed. Id. at 67. Therefore, installing new sheathing was a “cost of
replacing, rebuilding, or repairing any loss or damaged property in accordance with the
minimum code as required by state or local authorities.” Minn. Stat. 65A.10, subd. 1.
Great Northwest argues that coverage is not required under section 65A.10,
subdivision 1, relying heavily on our recent decision in St. Matthews, 981 N.W.2d 760,
which also involved the scope of an insurer’s obligation under the partial-loss provision in
section 65A.10. In St. Matthews, we concluded that the phrase “the damaged portion of
the property” in section 65A.10 is subject to only one reasonable interpretation and held
that in the event of a partial loss, the insurer’s “obligation to bring the property up to code
does not extend beyond that portion of the property that was damaged in the covered
event.” St. Matthews, 981 N.W.2d at 765.
St. Matthews involved a Saint Paul church damaged during a hailstorm. Id. at 762.
The church’s property insurer, State Farm Fire and Casualty Company, agreed to cover the
cost of repairing and replacing drywall in the church, which had sustained storm damage.
Id. at 763. But when the drywall was removed, cracks in the masonry behind the damaged
drywall were discovered. Id. The City of Saint Paul would not issue a building permit for
the repair and replacement of the drywall until the cracked masonry was repaired,
explaining that the cracks in the masonry impacted the structural integrity of the wall and
created a “hazardous condition.” Id. The city thus required the church to bring the masonry
10 into accordance with the city’s building code requirement as a condition of obtaining a
building permit. Id. The church asked us to hold that State Farm was required to pay to
repair the masonry as a covered cost of repairing the “damaged portion of the property”
under section 65A.10. State Farm maintained that it could deny coverage because any
issues with the masonry were “unrelated to the storm event.” St. Matthews, 981 N.W.2d
at 763 (internal quotation marks omitted).
We held that because the masonry was not “the damaged portion of the property,”
section 65A.10 did not require coverage. St. Matthews, 981 N.W.2d at 768. We stated that
there was “no dispute that State Farm fully covered the cost of replacing the drywall
consistent with any municipal codes related to the drywall,” and that “there is nothing in
the record to suggest that St. Matthews could not have installed the drywall without any
additional repairs to the masonry.” Id. at 766–67. Therefore, repairs to the masonry were
not covered under section 65A.10. Id. at 768.
The parties dispute whether this case is controlled by our decision in St. Matthews.
Great Northwest argues that this case is directly analogous to St. Matthews. It argues that
because no other roof layer besides the shingles was damaged in the storm, and because
“the shingles can be completely replaced in compliance with the municipal code without
making any additional changes to other parts of the property,” section 65A.10 does not
mandate coverage.
Campbell responds that this case is distinguishable. Campbell notes that in St.
Matthews, we observed that “from the perspective of a drywall installer, there was nothing
in the condition of the masonry that prevented the installation of new drywall.”
11 981 N.W.2d at 767. Campbell asserts that here, from the perspective of a shingle installer,
the damaged shingles could not be replaced in compliance with the code governing the
shingles without first installing a new sheathing surface. Campbell thus argues that while
the masonry repairs from St. Matthews were not within the scope of section 65A.10, a
code-compliant shingle surface is covered by the statute here.
We agree with Campbell. In the event of a partial loss, an insurer’s obligation under
section 65A.10, subdivision 1, is limited to “bringing up to code that ‘portion of the
property’ that was damaged.” St. Matthews, 981 N.W.2d at 765 (quoting Minn. Stat.
§ 65A.10, subd. 1). Here, we agree with the court of appeals that the damaged portion of
the property was the shingles alone—not the decking. 4 But critically, the state building
code governing shingle installation incorporates the instructions set forth by the shingle
manufacturer, which state that the replacement shingles could be installed only on a roofing
layer with gaps smaller than one-eighth of an inch. Great Northwest does not dispute that
the state building code imposed such a requirement. Nor does Great Northwest dispute
that Campbell’s home lacked such a surface. Thus, because the code governing the
damaged property required the installation of new sheathing, we conclude coverage is
required by section 65A.10, subdivision 1.
Our reasoning here aligns with St. Matthews. In that case, “there was nothing in the
4 Campbell argues that we should conclude that the shingles and the other layers of roofing together comprise one “damaged portion of the property”—“the roof.” But we rejected this reasoning in St. Matthews. Just as the drywall and the masonry were not one “portion” of the building in that case—“the wall”—the shingles and the decking are not one “portion” of the building here. See St. Matthews, 981 N.W.2d at 766–67.
12 condition of the masonry that prevented the installation of new drywall.” St. Matthews,
981 N.W.2d at 767. But here, the contractor could not have complied with state code
governing the shingles without installing new sheathing. And similarly, in St. Matthews,
“State Farm fully covered the cost of replacing the drywall consistent with any municipal
codes related to the drywall.” Id. at 766. In this case, Great Northwest’s failure to cover
the cost of installing a new sheathing surface means that they failed to “fully cover[] the
cost of replacing the [shingles] consistent with any municipal codes related to the
[shingles].” Id.
We therefore conclude that section 65A.10, subdivision 1, requires Great Northwest
to cover the cost of installing the new sheathing, because the sheathing cost was a “cost of
replacing [the damaged shingles] in accordance with the minimum code.” We thus affirm
the court of appeals’ decision affirming the grant of summary judgment to Campbell on
the sheathing issue.
II.
We now turn to the overhead and profit issue. Campbell argues that section 65A.10,
subdivision 1, requires Great Northwest to cover the contractor’s overhead and profit
related to the roofing repairs, even though the Great Northwest policy explicitly excluded
coverage for overhead and profit except in cases involving fire or lightning.
The “Overhead and Profit” endorsement in Campbell’s policy issued by Great
Northwest provided:
Overhead and profit on the materials and labor associated with roofing or the roofing system will not be covered under this policy unless the damage to the roof or roof system is a result of fire or lightning.
13 The bill from Campbell’s roofing contractor included line items for overhead and
profit—each in the amount of $2,641, for a total of $5,282. Campbell argues that the policy
endorsement limiting recovery of overhead and profit costs to certain cases is
unenforceable. Campbell asserts that overhead and profit are generally recognized in the
industry as necessary components of work performed by a general contractor, and that
therefore, they fall within the scope of the replacement cost coverage required by
section 65A.10. Great Northwest responds that Campbell “did not offer any evidence” that
the contractor’s overhead and profit here “were caused by a code compliance issue,” and
that Campbell therefore failed to demonstrate that coverage for overhead and profit is
required under the statute. The court of appeals affirmed the district court’s decision
granting summary judgment for Great Northwest, concluding that Campbell had not met
his burden of demonstrating that the district court erred—because Campbell “does not
explain how the statutory language supports his argument,” and because “Campbell
provides no authority to support his argument.” Campbell, 3 N.W.3d at 67.
The “burden of showing error rests upon the one who relies upon it.” Midway Ctr.
Assocs. v. Midway Ctr., Inc., 237 N.W.2d 76, 78 (Minn. 1975). The district court
concluded in this case that Great Northwest “has no legal obligation to pay” the overhead
and profit costs. Here, Campbell has cited no code provision—and indeed, no legal
authority—to support his argument that overhead and profit were a “cost of repairing”
Campbell’s damaged property “in accordance with the minimum code as required by state
or local authorities,” and thus required under section 65A.10, subdivision 1. Campbell’s
14 assertion that overhead and profit are a generally accepted cost of certain construction
projects is not enough to mandate coverage under the statute. Section 65A.10,
subdivision 1, requires insurers to provide coverage only for costs that are necessary to
conduct repairs in accordance with code requirements, and Campbell does not provide any
authority requiring the use of a general contractor, and their accompanying overhead and
profit costs, for these repairs. Because the district court found for Great Northwest on this
question, and because Campbell has failed to present any grounds upon which the judgment
of the district court can be reversed, we affirm the court of appeals’ decision affirming the
grant of summary judgment to Great Northwest on the overhead and profit issue.
* * *
Under Minnesota Statutes section 65A.10, subdivision 1, replacement cost
insurance must cover “the cost of replacing, rebuilding, or repairing any loss or damaged
property in accordance with the minimum code as required by state or local authorities.”
In the event of a partial loss, that obligation only extends to the “damaged portion” of the
home. Id. Today we clarify that section 65A.10, subdivision 1, requires insurers to cover
the cost of all repairs necessary to ensure that the damaged portion of the property can be
repaired, replaced, or rebuilt in compliance with the state or local code that governs the
damaged portion of the property. We therefore affirm the decision of the court of appeals
holding that Great Northwest must cover the cost of installing new sheathing to which
replacement shingles can be affixed in compliance with state code. We also affirm the
decision of the court of appeals affirming the grant of summary judgment to Great
Northwest on the question of overhead and profit, because Campbell has failed to
15 demonstrate that overhead and profit were a required cost within the scope of the statute.
CONCLUSION
For the foregoing reasons, we affirm the decision of the court of appeals.
GAÏTAS, J. took no part in the consideration or decision of this case.