The purposes of the Minnesota fire insurance policy statutes are to "prevent overinsurance by requiring prior valuation" and "avoid litigation by prescribing definite standards of recovery in case of total loss." Auto-Owners Ins. , 827 N.W.2d at 770 (quoting Nathan v. St. Paul Mut. Ins. Co. , 243 Minn. 430, 68 N.W.2d 385, 388 (1955) ). Minnesota Statutes Section 65A.01, subdivision 5, states that "[n]o provision shall be attached to or included in such policy limiting the amount to be paid in case of total loss on buildings by fire, lightning or other hazard to less than the amount of insurance on the same."

Minn.Stat. § 65A.01, subd. 1. The statute is considered a “valued policy” law. See Nathan v. St. Paul Mut. Ins. Co., 243 Minn. 430, 433, 68 N.W.2d 385, 388 (1955) (citation omitted) (internal quotation marks omitted). Such laws were enacted in response to the practice of fire insurance companies writing excessive amounts of coverage, collecting high premiums, and then reducing the amounts of recovery when losses occurred.

"* * * The authorities all agree that it is not necessary that the insured should have an absolute right of property, and that he has an insurable interest if, by the destruction of the property, he will suffer a loss, whether he has or has not any title to, lien upon, or possession of the property itself." In Nathan v. St. Paul Mutual Ins. Co. 243 Minn. 430, 431, 68 N.W.2d 385, 387, we recently held, following the Banner Laundry Co. case, that: "It is not necessary that the insured have an absolute right of property in order to have an insurable interest.

Additionally, as required by law, the Auto–Owners policy makes the deductible inapplicable in the event of a total loss. “The basic principle of a ‘valued policy’ statute is that the parties to a fire insurance contract agree in advance on a valuation of the property to be insured, and, in the absence of fraud, this valuation is binding and not subject to judicial inquiry.” Nathan v. St. Paul Mut. Ins. Co., 243 Minn. 430, 433, 68 N.W.2d 385, 388 (1955). “[T]he purpose of valued policy statutes is twofold: (1)[t]o prevent overinsurance by requiring prior valuation; and (2) to avoid litigation by prescribing definite standards of recovery in case of total loss.”

"The basic principle of a 'valued policy' statute is that the parties to a fire insurance contract agree in advance on a valuation of the property to be insured, and, in the absence of fraud, this valuation is binding and not subject to judicial inquiry." Nathan v. St. Paul Mut. Ins. Co., 243 Minn. 430, 433, 68 N.W.2d 385, 388 (1955). "[T]he purpose of valued policy statutes is twofold: (1) [t]o prevent overinsurance by requiring prior valuation; and (2) to avoid litigation by prescribing definite standards of recovery in case of total loss."

Other jurisdictions considering the application of valued policies have reached a similar conclusion. In Nathan v. St. Paul Mutual Insurance Co., 243 Minn. 430, 68 N.W.2d 385 (1955), under Minnesota statute (MSA § 65.05), the court stated that the basic principle of the valued policy is that the parties agree in advance on a valuation of the property, and in the absence of fraud this valuation is binding and not subject to judicial inquiry. The Eighth Circuit Court of Appeals, in dealing with the Missouri valued policy law, held that a material misrepresentation by the applicant will void a policy written upon the basis of such misrepresentation and that although it is the insurer's burden to evaluate the property insured, it can discharge this burden only when material facts are revealed to it by the applicant. Lumbermens Mutual Insurance Co. v. Edmister, 412 F.2d 351 (8th Cir. 1969).

Moreover, there is nothing in the record here which indicates circumstances giving rise to an increase in risk by reason of the presence of dangerous or inflammable materials on the premises such as fireworks and gasoline as dealt with in Betcher v. Capital Fire Ins. Co. 78 Minn. 240, 80 N.W. 971; Schaffer v. Hampton Farmers Mutual Fire Ins. Co. 183 Minn. 101, 235 N.W. 618, 236 N.W. 327; 29 Am. Jur., Insurance, §§ 677, 679; Annotation, 26 A.L.R. 2d 809. Under the circumstances before us the diminution in use of the property is not sufficient to constitute an increase in risk. We held in Nathan v. St. Paul Mutual Ins. Co. 243 Minn. 430, 68 N.W.2d 385, that what constitutes an increase of risk is a factual question for the finder of fact unless the increase is obvious, and we will not reverse such a finding unless it is manifestly contrary to the evidence. The trial court in the present case realistically pointed out that:

In the first appeal, we granted a new trial because of errors in admitting evidence of the value of the insured property at or prior to the time of the issuance of a "valued policy" under our statute. Nathan v. St. Paul Mutual Ins. Co. 243 Minn. 430, 68 N.W.2d 385. Some of the defenses advanced by the insurer in the first trial were abandoned upon retrial. In addition to other defenses alleged, the insurer amended its answer by setting up as a defense that the insured building was destroyed by fire of an incendiary origin attributable to plaintiff or that said fire was caused by or with the consent or knowledge of plaintiff or her agents.

The insurable interest was the lessee's obligation to replace the glass. In Nathan v. St. Paul Mutual Insurance Co., 243 Minn. 430, 68 N.W.2d 385 (1955), the supreme court stated that "all [the plaintiff] had to show in order to establish an insurable interest was that she would suffer a loss by the destruction of the building. * * *.

" (Page 713 of 191 F. Supp.) To the case of Dose v. Insurance Co. of State of Pennsylvania, 206 Minn. 114, 287 N.W. 866, cited and relied upon by Judge Devitt, there can be added the case of Nathan v. St. Paul Mutual Insurance Co., 243 Minn. 430, 432-437, 68 N.W.2d 385, 387-390, which indicates that, under the Minnesota "valued policy" statute, a fire insurance company is charged with knowledge of all matters material to the risk which are reasonably discoverable upon a proper examination of an insured structure. It seems apparent that a fire insurance company operating in Minnesota may not with impunity indulge in improvident underwriting. There is nothing that indicates to our minds that there was either error or prejudice in the way Judge Devitt handled the problem created by the jury's first returning a verdict for $75,000, which he did not accept and which obviously could not legally have been sustained.