Farm Bureau Life Insurance Company v. Holmes Murphy Associates, Inc., 831 N.W.2d 129 (Iowa 2013)

This Supreme Court of Iowa decision involves a couple, the Smiths, who were denied a life insurance policy because they tested HIV positive. Although Farm Bureau Life Insurance Company (Farm Bureau) knew of the couple's HIV status, the company only informed the Smiths that they were ineligible "due to blood profile results," and the Smiths remained unaware of their HIV status until nearly two years later. The Smiths sued Farm Bureau for negligence, and the federal district court granted summary judgment to Farm Bureau, finding that the insurance company had no legal duty to inform the Smiths of their HIV status. The Smiths appealed, and the United States Court of Appeals for the Tenth Circuit found in their favor. The Smiths and Farm Bureau later settled and the suit was dismissed.

Farm Bureau then sued its underwriter, Federal Insurance Company (Federal), for indemnity and its insurance broker, Holmes Murphy & Associates, Inc. (Holmes Murphy), for failing to notify Federal in time for the policy to cover the claim. The issue in the present case is whether Federal's policy would have covered the damages Farm Bureau was forced to pay for its negligence in the Smith case, if Holmes Murphy had provided timely notice.

The Supreme Court of Iowa looked at the language of one clause in the policy that excused Federal from liability for claims "arising from . . . the underwriting of insurance." The court ultimately found that the costs incurred for not reporting the Smiths' HIV status arose from Farm Bureau's underwriting, and would not have been covered by their insurance policy with Federal.