Iowa Standard Fire Policy

Jurisdictions typically follow one of three theories with respect to whether an innocent coinsured may recover under a property policy where another insured has committed an intentional act, such as arson, resulting in property damage: (1) a complete bar to coverage based on an unrebuttable presumption that the coinsureds hold joint interests in the property and joint obligations under the policy; (2) recovery permitted by innocent coinsured if it is established that his or her interest in the policy is severable from the wrongdoer; and (3) a contractual language and intent of the parties analysis.

In Postell v. American Family Mutual Ins. Co., 2012 Iowa Sup. LEXIS 102 (Nov. 16, 2012), the Supreme Court of Iowa followed the contractual language and intent of the parties theory, holding that: (1) a coinsured who sets fire to an insured dwelling in order to commit suicide has the requisite intent to “cause a loss” under the fire insurance policy; (2) an innocent coinsured, who did not participate in setting the fire, could not recover due to the subject policy’s intentional loss exclusion and (3) the innocent coinsured could not recover under the amended Iowa standard fire policy.
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