Interest does not accrue on money that is paid before it was due. That was the common-sense ruling recently obtained by Eric Steinhoff and João Medeiros in a lawsuit against a homeowners’ insurance company. The insurance company had helped the insured homeowners rebuild after their house had been damaged in a fire. Then, after a disagreement over the amount of the final payment, the insurance company and the homeowners asked a panel of appraisers to value the loss. The insurance company promptly paid the difference between what it had already paid and the appraisal value. The homeowners then sued the insurance company for interest on the award for the time between the fire and the payment of the appraised value of the loss—even for the amounts that the insurance company had already paid.

Relying on the text of the Minnesota Standard Fire Insurance Policy, which is written into state law, Eric Steinhoff and João Medeiros asked the district court to dismiss the case because interest would not begin to accrue until 60 days after the appraisal award was handed down— and the insurance company had paid its obligations in full within that time. The district court agreed and dismissed the lawsuit.

By coincidence, after Steinhoff and Medeiros filed arguments with the district court, the Minnesota Court of Appeals issued a decision in a different case reaching the same conclusion about the Minnesota Standard Fire Insurance Policy. The Minnesota Supreme Court is presently considering an appeal from the Minnesota Court of Appeals decision.