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Bauers sue for $4.9m, may be uninsured for Consumers Supply blaze

Thursday, April 10, 2008

The multi-million-dollar fire that consumed Consumer Supply Corporation of Storm Lake may not be covered by insurance.

The company owned by Jim Bauer of Storm Lake and his sons Robert and Jon, Snow Ridge LLC, has filed a lawsuit seeking nearly $5 million, alleging breach of contract by Community State Bank in Spencer for failing to cover the Richland Street structures destroyed in the towering blaze last December.

The suit indicates that Community State Bank approached Bauer in October of 2007 to submit quotes for insurance ccoverage, which had previously been provided by another company.

Bauer claims that the prices were lower than the competition, so he completed an application to purchase the insurance, and was issued a binder for $2.8 million in liability coverage for the buildings plus coverage of contents and potential loss of rent for warehouse space Consumer Supply had provided to several other local companies. Bauer then canceled his previous coverage.

On November, a representative of the bank allegedly contacted Robert Bauer to say that it had been determined that the value of the buildings exceeded the new coverage, and asked for an additional $2,000 a year in premiums. Bauer agreed, and believed that the additional coverage had been added.

On December 11, Bauer contacted the company to report the fire, and was told that Consumers Supply had no coverage. The bank claimed that no coverage had ever been provided to Snow Ridge.

The Bauers say in their suit that neither the bank or the brand of insurance they sold had informed them that they were being left without coverage, and that they had canceled their previous policy believing in good faith that they had been provided the new policy.

The Bauers say they had increased coverage to $4.92 million, and ask for that amount in damages, plus legal fees, interest and any other relief the court deems appropriate.

The company, founded by Jim Bauer's father, remains in rubble. Bauer has said that no decision had yet been made on whether to rebuild, but indicated that if Consumers Supply is rebuilt, the current site is the only location under consideration.



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