With tornadoes, lawmakers rethinking limits on appraisers

DES MOINES — Days after a series of tornadoes destroyed Iowa homes and businesses — killing seven people — state lawmakers considered changes to a bill that would alter a key step in making an insurance claim.

House File 2299 restricts the appraisal process, stating that appraisers shall not settle disputes between insurance companies and individuals about how damage occurred. Instead, the appraisers could determine only the cash value of a loss.

The House voted unanimously to pass the bill in late February, with no floor debate on the issue.

But after a line of storms — including nine tornadoes — swept Saturday through the state, an Iowa Senate subcommittee took a harder look at the proposal.

“This past weekend, we had horrific disasters across our state, including in my community,” said Sen. Zach Nunn, R-Bondurant. “ … While this bill passed the Iowa House on a largely bipartisan or completely bipartisan package, I want to make sure that we have a bill that really takes care of the policyowner first, specifically those who have been impacted by catastrophic loss.”

Insurance companies maintain the bill would be a good change. Iowa Insurance Institute lobbyist Brittany Lumley said a 2018 Iowa Supreme Court decision broadened the power of appraisers, allowing them to consider the cause of damage in addition to cost. She argued HF 2299 would return appraisers to the role they had before that decision.

“It’s just making sure that the appraisers stick to the loss and the cost of the damage, as opposed to the coverage and causation disputes, which are best left to the courts,” Lumley said.

Cedar Rapids lawyer Tim Johnson disagreed.

Johnson represented Walnut Creek Townhome Association of Urbandale in the 2018 Iowa Supreme Court case. Walnut Creek made a claim to Depositors Insurance Company for hail damage to the roof. Depositors said the damage was not caused by hail; but then a panel of appraisers determined hail did cause $1.4 million worth of damage to the roof.

Following a series of court decisions, the Iowa Supreme Court decided appraisers had the power to determine the cause of damage in addition to the cost.

“This didn’t change the law in Iowa,” Johnson said. “This upheld what had been the law in Iowa since 1940.”

Lawmakers on the Senate subcommittee did not immediately move the bill when they considered it this week.

Sen. Herman Quirmbach opposed the proposal, arguing it would require more insurance disputes to go to court.

“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,” Quirmbach, D-Ames said. “Having to fight your way to court in order to get a decent settlement … seems to me to be not in the interest of the general public and the insurance customers.”

Nunn asked stakeholders to propose amendments to the legislation before it moved to a full committee. Legislative records show that such a move has not yet been scheduled.

“Expeditiously being able to put legislation forward that helps these folks, whether it be from the derecho two years ago or what just happened this weekend, is our top priority,” Nunn said.

This article first appeared in the Iowa Capital Dispatch.