(CN) - The Farm Bureau Life Insurance Company cannot hold its insurance broker responsible for claims arising from its failure to inform a couple of their HIV-positive status, the Iowa Supreme Court ruled.
The decision by Justice Daryl Hecht affirmed an earlier ruling by Polk County, Iowa District Court Judge Arthur Gamble.
The events giving rise to the case commenced in October 1999, when a couple indentified as John and Mary Smith to protect their identities, applied for life insurance through Farm Bureau.
The insurer denied their application after a blood screen revealed they were both infected with the Human Immunodeficiency Virus; however, it never informed the couple they were both HIV-positive, something they wouldn't discover for themselves for another three years.
In 2002, they sued Farm Bureau for negligence and personal injury in the federal court in Wyoming, which concluded the insurance underwriter had no obligation to inform them of their HIV-status.
The 10th Circuit reversed the ruling, holding Farm Bureau should have at least provided the Smith with enough information about their blood screen to inspire them to make further inquiries about their health.
The Smiths filed an amended damages complaint in Wyoming, which Farm Bureau settled in June 2006.
Farm Bureau then filed Iowa state court claims against its insurer, Federal Insurance Company, for indemnity, and its insurance broker, Holmes, Murphy & Associates Inc., for failing to provide timely notice of the claims to its insurers.
Judge Gamble awarded summary judgment in favor of the insurers, finding that Farm Bureau failed to give them timely notice of the claims.
Gamble also granted the broker's motion for summary judgment, concluding that even if the insurers had been given timely notice of the claims, coverage would have been denied based on two exclusions in the policies. Farm Bureau appealed.
Upon review, Justice Hecht affirmed the district court's ruling, holding it correctly concluded the underwriting exclusion in the Insurance Company Professional Liability (ICPL) policy issued to Farm Bureau by Federal Insurance would have precluded coverage for the Smiths' claims even if it had been timely notified under the policy's notice requirement.
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