Here, a wind storm in 2006 caused significant damage to a farmstead. The property owners submitted claims for damage to a machine shed, grain bin, cattle shed, farm equipment, and their home. The insurance company issued a check for nearly $70,000 for the damage to the farmstead. However, the property owners disagreed with the amount determined by the insurance adjustor, claiming that the damage far exceeded that amount. They subsequently obtained estimates from professionals around the area for the repairs, including a bid for $123,000 for repair work to the family home. The insurance adjustor hired an investigator to examine the home and other farm property. The investigator found the adjustor’s determination to be adequate. So, the property owners filed suit against the insurance company for breach of contract and bad faith failure to pay.
To prove a claim for bad faith denial of insurance benefits in Iowa, a party must show that there was no reasonable basis for denying the claims. The trial court dismissed the bad faith failure to pay claim and proceeded to a jury trial on the issue of breach of contract. The jury determined that the adjustor’s amount was reasonable and that some of the damage was from pre-existing damage. The property owners appealed to the Iowa Court of Appeals and the appellate court sided with the trial court stating that there was plenty of evidence to suggest that the amount issued by the insurance company was proper, based upon the experts’ assessment of the damage caused by the wind storm. Van Gelder v. Adams Mut. Ins. Assoc., No. 9-858/09-0402, 2009 Iowa App. LEXIS 1710 (Iowa Ct. App., Dec. 30, 2009).