Would “Iowa Code Section 554.2302 Unconscionable contract or clause” apply to property insurance companies? Thank you!
Thank you for your question.
Iowa Code Section 554.2302 on its face appears to generally apply to contracts and so would apply to contracts of insurance. And in Farm Bureau Life Ins. v. Chubb Custom Ins. Co., 780 N.W.2d 735, 743 (Iowa 2010), the Iowa Supreme Court considered whether Iowa Code Section 554.2302 might apply to specific clauses in an insurance policy. That said, as discussed in the case, the question of whether a particular clause is in fact unconscionable is a factual matter and the entity seeking to show unconscionability must put forward evidence in support of their claim.
As a practical matter, we have not been able to find any published cases in which a policyholder successfully argued that an insurance policy was unconscionable under Section 554.2302, though it is possible that policyholders have advanced such arguments and were able to favorably settle their cases out of court. We recommend policyholders in Iowa review United Policyholders “Insurance Consumer Rights” page for Iowa for a general discussion of Iowa’s consumer protection rules that specifically relate to insurance. https://uphelp.org/claim-guidance-publications/insurance-consumer-rights-in-iowa-2022/.