House Commerce Committee turns back on Iowa policyholders
February 27, 2013 - HSB 144

The Iowa Association for Justice (IAJ) is disappointed that the Iowa House Commerce Committee would move to overturn well-reasoned Supreme Court decisions that guarantee insurance coverage will be there for hard-working Iowans when they need and deserve it.

HSB 144 gives special protections to insurance agents who fail to properly discharge their duties and responsibilities to customers. If this bill is signed into law the Iowa Supreme Court’s holdings in Langwith v. American National General Insurance Co. and Pitts v. Farm Bureau Life Insurance Co. will both be overturned and unsuspecting insurance policyholders will be left with little to no legal recourse when an agent’s misrepresentations or miscues lead them into financial ruin.

These merchants, vendors or service providers will arguably owe more duty to their customers than an insurance agent, if this bill becomes law…

1. Used Car Salespersons
2. Door-to-door Vacuum Cleaner Salespersons
3. Pawn Shop Clerks
4. Custom Birdhouse Makers
5. Girl Scout Cookie Salespersons

This may seem like a joke, but the idea of holding licensed insurance agents to a lower standard than these merchants, vendors or service providers is not funny –– it's obnoxious and dangerous. The merchants, vendors or service providers listed above would all appear to be bound by the Uniform Commercial Code and thus subject to an implied warranty that the goods and services they are selling are fit for the purpose for which they are intended. HSB 144 all but obliterates similar obligation (and accountability thereto) for insurance agents.

Iowans deserve insurance coverage they can rely on in times of great loss and need. By passing HSB 144, the House Commerce Committee is jeopardizing the insurance coverage of all Iowans, and making insurance agents unaccountable to their customers.