Business Law

On April 4, 1986, a fire extensively damaged plaintiffs' kitchen and garage, and caused smoke, electrical, and water damage throughout their home. Immediately after the fire and for the three weeks following, Aetna's agents mistakenly represented to the Andreason's that their fire losses would be covered by their insurance policy with Aetna. A week after the fire, Aetna's adjuster visited plaintiffs' burned home, instructed them on repairs, and authorized them to proceed. Plaintiffs immediately began extensive clean up and repair work consistent with the adjuster's instructions. The Aetna agent provided detailed instructions on repairs and replacements that should be undertaken. For example, according to Mr. Andreason, the agent told him not to consider repairing some items, but to simply discard them and purchase new ones. These items included the living room carpet, the kitchen range, kitchen cabinets, a cedar wall, and the tile floor. Mr. Andreason claimed that without the promise of insurance coverage, he would have boarded up his home, gradually done the work himself, and repaired rather than replaced many items. The work, presented in an itemized bill approved by the insurance adjuster, totaled $41,957. When Aetna belatedly denied insurance coverage for their fire losses, the Andreason's sued for payment to them of the money spent to undertake the approved repairs. Who wins and why