Iowa Bill Would Limit Home Insurance Appraisals After Natural Disasters

It's not clear whether Iowa lawmakers will advance a bill that critics said will make it harder for homeowners to successfully make insurance claims for damage caused by natural disasters like the tornadoes that swept through the state on Saturday.

The bill would limit the appraisal process used in disputed claims to only determining the cost of the damage to the home. Appraisers would no longer be able to determine what caused the damage.

Critics said that would force more Iowans to go to court to have their claims resolved, rather than using the appraisal process, which is typically faster and cheaper.

The measure, House File 2299, passed the Iowa House unanimously in late February, but it drew fierce opposition from insurance adjusters and Iowa homeowners at a subcommittee meeting Monday, and the meeting's chair said it might not advance.

"My intent is either we have an amendment and we hold a second subcommittee by Monday or this is going to be dead for this session," said Sen. Zach Nunn, R-Bondurant.

"At this point, I don't see enough information to move it forward," he added.

Brittany Lumley, a lobbyist for the Iowa Insurance Institute, said a 2018 Iowa Supreme Court case expanded the appraiser's role. She said the bill would restore Iowa's law to the way it previously worked.

"The process will work the same," she said at the subcommittee. "It's just making sure that the appraisers stick to the loss and the cost of the damage as opposed to the coverage causation disputes."

But Tim Johnson, a Cedar Rapids lawyer who handled the case, said the Supreme Court upheld current law and told lawmakers not to pass the bill. He said it would be good for his business but bad for Iowans who might be drawn into more costly litigation over their insurance claims.

"This bill would make me lots of money. This bill is good for me as a lawyer because everything is going to go into litigation," he said. "And here's what I know: The citizens of Iowa cannot afford to not have a cheap resolution process that gets these claims resolved without needing somebody like me. I should not be necessary hardly ever."

Sen. Jason Schultz, R-Schleswig, who chairs the Senate Commerce Committee, said he believes the 2018 case tipped the scales too far in favor of insurance adjusters.

"All of a sudden now I see what we have is a new industry springing up as public adjusters try to take another bite at the apple," he said. "And it's going to cause insurance premiums to go up."

Discussion on the bill frequently came back to the tornadoes that swept through Iowa over the weekend. Six people died in Winterset and one died near Chariton.

"This past weekend we had horrific disasters across our state, including in my community. I think we spent most of Sunday picking up from tornado debris that ravaged communities," said Nunn, who is running for Congress in Iowa's 3rd District.

Sen. Herman Quirmbach, D-Ames, opposed the bill. He said the current process is fair and efficient "and if it ain't broke, don't fix it."

"Trying to recover from all of those damages is enough of a burden, and not just for the individual homeowner. For the business community, for the whole of the community," he said. "Having to fight your way into court in order to get a decent settlement, which you know very well could take years, seems to me to be not in the interest of the general public and the insured customers."

Stephen Gruber-Miller covers the Iowa Statehouse and politics for the Register. He can be reached by email at [email protected] or by phone at 515-284-8169. Follow him on Twitter at @sgrubermiller.