In this аppeal, we must decide if the rights of an insured to the replacement costs of damaged property covered under a casualty insurance policy were properly assigned by the insured to a mortgagee, and whether an assignee is required to make the repairs or replace the property *234 before the insurer is obligated to pay replacement costs. The district court and court of appeals found the assignment was valid and that the intent to rebuild by the assignee triggered the insurеr’s obligation to pay. We agree that the assignment was valid and conclude the assignee was relieved of the condition precedent to repair or replace the property based upon a repudiation of the insurance contract by the insurer. We affirm the decision of the court of appeals and the judgment of the district court.
I. Background Facts and Proceedings.
R.L. Schott Implements, Inc. (Schott) operated a John Deere implement dealership in Sigourney, Iowa. The dealership was operated on land owned by Schott. There were two buildings on the premises' — a storage and maintenance building, and an office building which housed the retail portion of the business.
On August 26, 1997, Schott executed a mortgage on the property to Conrad Brothers Partnership (Conrad Bros.) to secure a $300,000 promissory note. Pursuant to the mortgage, Schott was required to maintain insurance which provided replacement cost coverage on the buildings to protect against windstorm loss and other commercially reasonable hazards.
The mortgage agreement additionally delineated the parties’ rights in the event of a default on the note by Schott. Upon default, Conrad Bros, was permitted to immediately record a deed in lieu of foreclosure. The deed constituted complete satisfaction of Schott’s obligations under the mortgage. Furthermore, the mortgage provided that the deed would result in the assignment of Schott’s rights to any insurance proceeds.
Schott obtained a casualty insurance policy from John Deere Insurance Cоmpany (John Deere) in March 1998. The policy insured the two buildings against windstorm loss. It permitted the insured to make a claim for the actual cash value of the property, as well as an additional claim for the replacement costs. However, the policy posed several conditions on a claim for replacement costs. First, the insured was required to replace or repair the damaged property within a reasonable time after the loss or damage. If the insured rebuilt on a different prеmises, it was entitled to no more than the cost to replace the building on the same premises using similar material as the original building. In addition, the insured was required to notify the insurer within 180 days of loss of the insured’s intent to seek replacement costs.
John Deere included a standard loss payable provision in the insurance policy. It provided for the payment of damages to a mortgagee named in the policy. Conrad Bros, was not named as a loss payee or a mortgage holder. Moreover, the policy prohibited the assignment of rights and duties under the policy without John Deere’s written consent. Schott did not request John Deere’s approval of the assignment clause contained in its mortgage agreement with Conrad Bros. Prior to the incidents giving rise to this action, John Deere was unaware of Conrad Bros.’s interest in the insured property.
After losing its dealership license in May 1998, Schott terminated its business operations. On June 29, 1998, a windstorm extensively damaged the office building and completely destroyed the storage and maintenanсe building. Schott promptly filed a proof of loss with John Deere. Conrad Bros, then informed John Deere of its mortgage interest. Not long after the windstorm loss, Schott defaulted on the *235 mortgage. Conrad Bros, elected to file the deed in lieu of foreclosure on July 14, 1998.
The full cost to replace the buildings totaled $120,075. The actual cash value of the loss equaled $60,037.50. John Deere issued a joint check to Schott and Conrad Bros, for the actual cash value, minus the deductible. Schott subsequently endorsed the check to Conrad Bros.
Conrad Bros, then made a claim for the replacement costs from John Deere. John Deere informed Conrad Bros, it was not covered by the policy because it was not listed as a mortgage holder. Thus, it informed Conrad Bros, that any claim under Schott’s insurance policy would be denied.
Conrad Bros, filed a petition at law requesting replacement cost damages of $60,037.50, plus interest. John Deere responded by claiming Conrad Bros, extinguished its insurable interest when it filed the deed in complete satisfaction of the mortgage, and further contested the validity of the assignment. Alternatively, John Deere pled the affirmative defense of lack of compliance with the condition precedent requiring actual replacement before an insured is entitled to replacement costs.
Conrad Bros, moved for summary judgment. It claimed it held a valid assignment and John Deere’s refusal to acknowledge any responsibility for coverage excused the performance of any condition precedent under thе insurance agreement to rebuild. It further claimed it was ready and able to rebuild but wanted assurance from John Deere that it would pay the replacement costs before rebuilding.
The district court granted summary judgment for Conrad Bros. It found the assignment was valid and Conrad Bros, was entitled to receive the replacement costs under the policy without first repairing or replacing the buildings. The court found it would be unreasonable to require Conrad Bros, to comply with the condition when John Deere was disputing the coverage.
The court later held a trial to determine whether Conrad Bros, was entitled to a damage award. Following the evidence, the district court found Conrad Bros, had complied with the provision requiring notice of intent to seek replacement costs within 180 days of the loss and it was reasonable for it not to perform the condition requiring the repairs to be made because John Deere had denied any coverage. The district court entered judgment for Conrad Bros, in the amount of $60,037.50.
John Deere appеaled. We transferred the case to the court of appeals. It affirmed the district court’s conclusions regarding the validity of the assignment and Conrad Bros.’s right to replacement cost coverage. It determined Conrad Bros, complied with the policy provision requiring actual replacement before the insured is entitled to replacement costs under the circumstances based on its intent to replace the property.
John Deere petitioned for further review. It claims the deed in lieu of foreclosure filed by Conrad Bros, extinguished the debt and eliminated any insurable interest. Alternatively, John Deere claims that its denial of coverage did not excuse the condition precedent requiring the buildings to be rebuilt before it was obligated to pay replacement costs.
II. Standard of Review.
Initially, we must determine our standard of review. John Deere contends our review is limited to the summary judgment ruling. Conversely, Conrad Bros, counters we must also review the post-trial ruling, as the district court’s conclusions
*236
further supported the summary judgment decision. In either case, our standard of review is the same. We review for errors at law.
See Pierce v. Farm Bureau Mut. Ins. Co.,
III. Insurable Interest.
It is a well-established rule of insurance law that a person must possess an insurable interest in the insured property in order to recover under a policy of insurance. See 44 C.J.S. Insurance § 219, at 419 (1993). John Deere advances two reasons in support of its argument that Conrad Bros, had no insurable interest in the two damaged buildings insured by Schott. First, John Deere contends the purported assignment was invalid because the insurance policy expressly prohibited assignments and, alternatively, because the assignment was executed before the loss had been incurred. Second, John Deere claims the filing of the deed extinguished Conrad Bros.’s equitable lien on the insuranсe proceeds because the deed was accepted as full satisfaction for Schott’s debt.
A. Assignment.
At common law, an insured was prohibited from assigning its insurance policy and underlying rights. 43 Am.Jur.2d Insurance § 789, at 851 (1982). However, the law now generally favors the assignability of choses in action, and courts have permitted the assignment of insurance policies under statutes providing- for the assignment of contracts in exchange for a money payment. Id. Iowa Code section 539.1 is such a statute. See Iowa Code § 539.1 (1997) (assignment of nonnegqtiable instruments).
Notwithstanding,, insurers may impose conditions in the terms of the policy on an insured’s ability to assign its rights under the insurance policy. 43 Am. Jur.2d
Insurance
§ 790, at 852. One common condition imposed on insureds is the requirement to obtain the insurers’ consent before granting an assignment.
Id.
§ 810, at 865. Generally, insurance policies, particularly those regarded as personal contracts, such as fire insurance and liability policies, are not assignable prior to loss without the insurer’s consent.
Id.
§ 789, at 852;
see Antal’s Restaurant, Inc. v. Lumbermen’s Mut. Cas. Co.,
The casualty insurance policy issued to Schott in this case contained what is considered to be standard policy language prohibiting an insured from assigning its interests without the insurance company’s consent.
1
The anti-assignment
*237
provision did not specify whether it applied to assignments executed before or after the loss. However, general stipulations prohibiting assignments absent an insurer’s consent have been held to apply only to pre-loss assignments. 43 Am.Jur.2d
Insurance
§ 792, at 854. The great weight of authority supports the rule that an anti-assignment clause does not apply to the assignment of claims arising after the loss.
See Straz v. Kansas Bankers Sur. Co.,
The policy underlying these well-settled rules explains the rationale for distinguishing between assignments before and after loss. The primary reason for the prohibition of assignments prior to loss absent an insurer’s consent is to protect the insurer against increased risks of loss resulting from an assignment of coverage to a new insured.
See Viola,
We must next consider whether the assignment in this case occurred before or after the windstorm damaged Schott’s buildings. John Deere claims this was a prohibited pre-loss assignment because the assignment was effective upon the execution of the mortgage agreement. To the contrary, the mortgage agreement provided for assignment of the insurance policy rights upon the filing of the deed in lieu of foreclosure. Although the assignment clause in the mortgage existed before the loss, it was merely an agreement to assign and did not become an actual assignment until the filing of the deed.
See Buege,
As assignee, Conrad Bros, stepped into Schott’s shoes.
Kelly v. Iowa Mut. Ins. Co.,
B. Filing of Deed in Lieu of Foreclosure.
In addition to obtaining an insurable interest by assignment, Conrad Bros, had an insurable interest in the buildings to the extent secured by the mortgage. 44 C.J.S.
Insurance
§ 228(b), at 430. Even though Schott failed to name Conrad Bros, as a loss payee or mortgage holder, the mortgage covenant requiring Schott to maintain insurance gave Conrad Bros, an interest in the insurance policy. 5A John A. Appleman & Jean Appleman,
Insurance Law and Practice
§ 3381, at 243 (rev. ed.1970) [hereinafter Appleman];
see Winneshiek Mut. Ins. Ass’n v. Roach,
A mortgagee’s interest in an insurance policy obtained on its behalf continues until the mortgagee extinguishes the mortgage debt. 44 C.J.S.
Insurance
§ 228(b), at 431. John Deere contends Conrad Bros.’s interest in insurance proceeds extinguished when it filed the deed in lieu of foreclosure in complete satisfaction of the mortgage and its underlying obligations. John Deere correctly notes that the filing of the deed released Schott from further liability.
Lititz Mut. Ins. Co.,
Any claim that Conrad Bros, will be unjustly enriched by this holding is unfounded. In fact, John Deere would be the unjustly enriched party if we ruled otherwise, as it would successfully avoid paying proceeds altogether.
Id.
This is nоt a case where the mortgagor has obtained a judgment for the full amount secured by the mortgage.
See Farmers & Merchants Sav. Bank v. Farm Bureau Mut. Ins. Co.,
IY. Replacement Cost Coverage.
Under the applicable provisions of the insurance policy, Sсhott was required to replace the damaged buildings in order to qualify for replacement cost coverage. The parties agree that this provision operates as a condition precedent to recovery of replacement costs.
See Kolls v. Aetna Cas. & Sur. Co.,
It is widely recognized that “a party may not rely on a condition precedent when by its own conduct it has made compliance with that condition impossible.”
State Farm Fire & Cas. Ins. Co. v. Miceli,
The district court and the court of appeals relied upon this approach to excuse the performance of the condition to rebuild the property under the insurance agreement.
See Mel Frank Tool & Supply, Inc. v. Di-Chem Co.,
*241 In this case, Conrad Bros, would be capable of performing the condition once coverage was determined. Nevertheless, the district court and court of appeals excused performance of the condition to rebuild based upon a finding that it would be a useless and unreasonable act without assurance of coverage. While this reasoning is sound, another doctrine exists that properly considers this rationale, and enables Conrad Bros, to obtain a judgment for the replacement costs without first replacing the buildings.
Where one party to a contract repudiates the contract before the time for performance has arrived, the other party is relieved from its performance. See Restatement (Second) of Contracts § 253(2) (1981); 13 Richard A. Lord, Williston on Contracts § 39:37, at 663 (4th ed.2000) [hereinafter Williston ]. Additionally, once a party repudiates a contractual duty before performance is due, the other party may enforce the obligation by filing a claim for damages without fulfilling any conditions precedent. Restatement (Second) of Contracts § 253 cmt. b; 13 Williston § 39:37, at 666, 668. A repudiation of a contract is accorded the same effect as a breach by nonperfоrmance. Restatement (Second) of Contracts § 255 cmt. a. The rationale for the repudiation doctrine is explained as follows:
The rationale behind the rule that a repudiation of a contract by one party will excuse the other party from the duty to perform contractual obligations and conditions, is the prevention of economic waste, in the sense that, following a clear repudiation, the other party should not be required to perform the formal, economically wasteful, and useless act of further performing. “It would seem to be reasonable and just, upon the repudiation of the contract by one party, that the other be held justified in ceasing performance, stopping expenditure, and thus curtailing the damages which the other party would be ultimately liable to pay.” To further comply with the contract requirements where the other party has repudiated the contract would be a useless act, and the law does not require the doing of a useless act.
13 Williston § 39:37, at 666-67 (footnotes omitted); see Restatement (Sеcond) of Contracts § 255 cmt. a (“No one should be required to do a useless act.... ”).
Normally, “repudiation consists of a statement that the repudiating party cannot or will not perform.” II E. Allan Farnsworth,
Farnsworth on Contracts
§ 8.21, at 535 (2d ed.1998) [hereinafter
Famsivorth
]. “The statement must be sufficiently positive to be reasonably understood ... that the breach will actually occur.”
Id.; see Lane v. Crescent Beach Lodge & Resort, Inc.,
It can be particularly difficult to determine if a statement amounts to a repudiation when it results from an honest but mistaken misunderstanding of the rights of the parties under the contract. II Farnsworth § 8.21, at 536-37. Generally, a good faith dispute by a party will not prevent a statement from becoming a repudiation. Id. at 537. Thus, a party typically “acts at its peril if that party, insisting on what it mistakenly believes to be its rights, refuses to perform its duty.” Id. However, when two parties differ as to the interpretation of a contract, the mere demand by one party thаt the contract be performed according to its interpretation does not in and of itself constitute repudia *242 tion. 4 Arthur Linton Corbin, Corbin on Contracts § 973, at 911 (1951). Instead, a demand must be accompanied by a clear expression of intent not to perform under any other interpretation. See id.; P & L Contractors, Inc. v. Am. Norit Co., 5 F.3d 133, 139 (5th Cir.1993). Thus, a demand for performance on terms that go beyond the contract does not constitute repudiation, unless coupled with an intent not to perform if those terms are not accepted. II Farnsworth § 8.21, at 537-38.
In this case, John Deere denied any coveragе on the claim by Conrad Bros. This denial of coverage, even though based upon a mistaken interpretation, was a clear intent not to perform. Thus, John Deere repudiated the contract. This conclusion is consistent with the general view that an insured is excused under the doctrine of repudiation from compliance with preliminary conditions of an insurance policy when “an insurance company indicates that it will not pay an insurance loss in any event.” 13
Williston
§ 39:39, at 678;
see Larsen & Son v. Retail Merchants Mut. Ins. Co.,
The result in this case may seem somewhat harsh considering there was no evidence that John Deere denied coverage in bad faith. However, there are three factors which mitigate any harshness of the result. First, insurers may resolve coverage disputes without repudiating the insurance contract by utilizing such procedural devices as declaratory judgments. See Restatement (Second) of Contracts § 250 cmt. d. Second, even though an insurer dеnies coverage in good faith, the result to the insured, or an assignee of the insured’s claim, is the same. The insured or assignee will not obtain coverage by performing the condition precedent. Third, the insured is unable to use the insurer’s repudiation as a windfall, because the insured must prove the repudiation materially contributed to its nonperformance. See Restatement (Second) of Contracts §. 255.
Under the applicable governing principles, Conrad Bros, was entitled to rely on John Deere’s statements that it would not pay a replacement cоst loss to an assignee. As a result, we conclude John Deere repudiated its obligation under the contract. The only remaining issue to determine is whether that repudiation also contributed materially to the occurrence of Conrad Bros.’s failure to repair or that such failure to repair would have occurred in any event. See id. & cmt. a. The district court made the following finding of fact on this point:
Conrad showed through the testimony of Gail Conrad and John Conrad and through its exhibits, including Plaintiffs Exhibit 3, that it had incurred or was ready, willing, and ablе to incur amounts in excess of $60,037.50 by way of acquisition of a replacement building to the building destroyed on the R.L. Schott premises on June 28,1998.
There is substantial evidence from which the court could have concluded Conrad Bros, would have repaired but for John Deere’s repudiation. Consequently, that condition is excused, and Conrad Bros, is entitled to damages based on the full replacement costs. We affirm the judgment of the district court.
DECISION OF COURT OF APPEALS AND JUDGMENT OF DISTRICT COURT AFFIRMED.
Notes
. The anti-assignment clause specifically provided:
Your rights and duties under this policy may not be transferred without our written *237 consent except in the case of death of an individual named insured.
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All other terms and provisions of the policy remain unchanged.