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Vol. 5, Iss. 10
October 12, 2016

Brenda Wallrichs:
Practicing Insurance Coverage Law In Iowa

As we all know, insurance coverage law can vary widely (sometimes really widely) from state to state. Each state has its own key coverage decisions and things about practicing there that make it unique. When it comes to the larger states we usually know what many of these are. California has Cumis. New York has §3420(d). New Jersey has Burd. Arizona has Morris. But what about the less-populated states? They have their own DNA too. But it is not as well known.

Welcome to My Hometown – a new column in Coverage Opinions that asks a coverage lawyer, practicing in a lesser-populated state, to describe some of his or her state’s key coverage decisions and aspects of practicing there that may differ from other states.

I am grateful to Brenda Wallrichs, of Lederer Weston Craig PLC, in Cedar Rapids, Iowa, for her willingness to help me get My Hometown off the ground.


Welcome to Iowa, where I have practiced for the past twenty years. Iowa coverage law, by and large, is not very different from that of the majority of jurisdictions. However, there are a few notable exceptions. As is the case in most states, the duty to defend is broader than the duty to indemnify. Employers Mut. Cas. Co. v. Cedar Rapids Television Co., 552 N.W.2d 639, 641 (Iowa 1996). Typically, the duty to defend turns on whether the petition contains any allegations that arguably or potentially bring the action within the policy coverage. Id. However, unlike some jurisdictions, the determination of the duty to defend can extend beyond the “four corners” (or “eight corners” for you Texas readers) to take into account any other admissible and relevant facts in the record. First Newton Nat’l Bank v. General Cas. Co. of Wisconsin, 426 N.W.2d 618, 623 (Iowa 1988).

With respect to specific policy provisions, the Iowa Supreme Court recently considered the meaning of “occurrence” as used in liability insurance policies. National Sur. Corp. v. Westlake Inv., LLC, 880 N.W.2d 724 (Iowa 2016). The case is important for two reasons. First, Iowa joined those jurisdictions holding that defective construction by a subcontractor may be an occurrence under the general contractor’s policy. Second, the Court utilized the intentional acts exclusion to define what constitutes an “occurrence” and held that even intentional conduct may be an occurrence so long as the insured did not expect or intend both the act and the resulting harm. If the insured expected or intended both the act and resulting harm, then the conduct is not an occurrence (and, additionally, the intentional acts exclusion should apply). Amco Ins. Co. v. Haht, 490 N.W.2d 843, 845 (Iowa 1992). Using an exclusion to define the meaning of an insuring agreement term is a first for our court.

Iowa may differ from a number of states regarding its construction of the pollution exclusion. To date, pollution exclusions have been construed broadly, and Iowa courts have rejected the argument that these exclusions are ambiguous in the sense that it is unclear whether they apply only to traditional environmental pollution or were intended to extend beyond environmental pollution. Bituminous Cas. Corp. v. Sand Livestock Systems, Inc., 728 N.W.2d 216 (Iowa 2007). In Sand Livestock, the Iowa Supreme Court applied the exclusion almost literally, holding that it barred coverage for a death resulting from carbon monoxide poisoning because carbon monoxide was a gaseous irritant or contaminant, which was released from a propane power washer. I expect the pollution exclusion will be revisited soon as there are several cases pending in the state brought by property owners that neighbor CAFOs (for those of you from non-agricultural states, that’s “confined animal feeding operations”; think hundreds of cattle or hogs all crowded onto a relatively small plot of land and the concomitant and very pleasant odors, pests, etc. that traverse to the neighboring plaintiffs’ property). Whether the pollution exclusion bars coverage for these suits will no doubt be tested by either insurers asked to defend or policyholders seeking a defense.

Finally, no one likes to talk about bad faith, but Iowa has very good law from the industry standpoint. To establish bad faith, the policyholder must prove: 1) the absence of a reasonable basis for the failure to pay benefits/refusal to defend and indemnify; and 2) that the insurer knew or should have known its failure/refusal was without reasonable basis. So long as the claim is fairly debatable, whether on an issue of fact or of law, bad faith liability should not be imposed. Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 473 (Iowa 2005). Additionally, in most cases the bad faith claim must be brought at the same time as the breach of contract claim or risk being barred by the doctrine of claim preclusion. Villarreal v. United Fire & Cas. Co., 873 N.W.2d 714 (Iowa 2016).

Probably the most notable difference about practicing in Iowa, as opposed to most jurisdictions, is that the body of insurance coverage case law is not as well-developed. Given our population and business base, coverage litigation just doesn’t occur here nearly as much as in more populous states. Thus, it can be a challenge to advise insurers how a particular issue will be handled by our courts. Another difference is that Iowa is generally not at the forefront of emerging coverage issues. By the time an issue is raised to our courts, it has typically been vetted in other jurisdictions (which can be beneficial in the sense that some of the “hard” work has already been done). And, finally, one of the best things about practicing in Iowa is the people. We’re a fairly small legal community. Between the likelihood of running into each other again, and good old Midwest values, other attorneys and judges are generally congenial and a pleasure to work with. If you ever actually make a visit here, please look me up!

Brenda Wallrichs is a member of Lederer Weston Craig PLC in Cedar Rapids. She heads up the firm’s insurance coverage and appellate practices. Brenda is a Fellow in the American College of Coverage and Extracontractual Counsel and a member of the Federation of Defense and Corporate Counsel. She is also a member of the DRI Insurance Law Committee where she serves on the Steering Committee and as the online Community chair and the Social Media chair. She is active in the planning and marketing of the ILC’s biennial seminars, the Insurance Coverage and Claims Institute and the Insurance Coverage and Practice Symposium. Brenda serves on the Risk Management Advisory Committee for the City of Cedar Rapids, Iowa, recently completed her six-year appointment on the Sixth Judicial District of Iowa’s Judicial Nominating Commission and serves as President of the Parish Council at her church. In her free time, she cheers on her son at soccer and basketball games and her daughter at gymnastics meets.

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