Iowa policyholders deserve good faith insurance law that asks why insurance money remained unpaid when competent adjusting could have established that it was owed. After reading Cutler v. Guardian Mutual Insurance Association, 1 I am concerned that the court has given insurers a roadmap for defending slow payments and sloppy adjusting.
I do not yet have the underlying briefs or the full trial court record. I intend to obtain them and write a second blog post examining what was argued and what evidence was presented. Those materials may explain matters the opinion leaves unanswered. For now, my criticism concerns the court’s written reasoning and the claims practices it risks encouraging.
A fire damaged the Cutlers’ home on April 9, 2023. Guardian paid $5,000 the next day, inspected the property on April 12, and supplied a contents inventory template on April 13. The opinion calls the $5,000 an “advance.” That means a credit against the eventual settlement. It does not establish that the money was paid before it was owed. An initial partial payment deserves to be evaluated as performance of the insurance contract.
Guardian paid $15,987 in additional living expenses on May 10. But the opinion identifies no further dwelling or contents payment until July 7, when Guardian issued checks totaling $299,872.96 under those coverages. That was 89 days after the fire and 88 days after the initial payment. The opinion does not separate the July payment into its dwelling and contents components.
Could a diligent adjuster have determined that another $25,000, $50,000, or $125,000 was payable during those intervening weeks? The opinion does not meaningfully answer that question. I am not suggesting that the entire July payment was necessarily due immediately after the fire. I am asking why portions of it could not reasonably have been determined and paid much sooner.
The court emphasizes the complexity of the loss, competing repair estimates, and the homeowners’ incomplete and changing contents spreadsheets. Those circumstances can explain genuine disagreements. They do not explain every delay affecting every item. A dispute over replacing electrical wiring does not automatically prevent payment for other established building damage. An unfinished inventory does not make every identifiable destroyed possession impossible to value.
The opinion describes an early inspection, but it does not explain what early contents inventory or valuation the insurer prepared. What did the adjuster document, price, and determine could be paid? Why could he not work with the homeowners to establish a payable portion while the remaining inventory was developed? A spreadsheet is a tool. Handing it to a family displaced by fire does not establish that the insurer has diligently adjusted its contents loss.
Iowa’s own rules deserve attention. Rule 191-15.44(2)(a) assigns the insurer responsibility for determining actual cash value when a residential fire loss is adjusted and settled on that basis. Rule 191-15.42(4) requires forms, instructions, and reasonable assistance upon notification of a claim. Those obligations do not automatically establish bad faith tort liability, but a court evaluating reasonable claims handling should confront them. The opinion does not discuss these provisions.
Instead, the court says the homeowners must establish entitlement to “all policy proceeds requested” beyond reasonable disagreement to avoid summary judgment on bad faith. That formulation is especially troubling in a delayed payment case. It risks allowing a bona fide dispute over the final amount to excuse withholding a smaller amount that diligent investigation could already have established.
Insurers routinely make internal estimates of expected payments when setting loss reserves. I would like to see Guardian’s reserve history and the information supporting it. A reserve does not automatically establish the amount presently payable. But if the insurer had information supporting a substantial expected payment, that information should be examined to determine whether it also supported an earlier partial payment. The opinion tells us nothing about that.
I have a book in my office titled Aggressive Good Faith and Successful Claims Handling, published by the Insurance Institute of America. The title captures the professional attitude policyholders should expect from an adjuster to actively investigate the loss, help establish the damage, and promptly deliver the benefits that can reasonably be determined. This decision risks rewarding the opposite approach by accepting unresolved adjusting as a broad explanation for unresolved payment.
Delayed payment has financial consequences. The insurer retains the use of money while the policyholder waits for funds needed to recover. Warren Buffett’s explanation of insurance float describes that economic benefit; it does not endorse improper delay. Nor does this opinion establish that Guardian deliberately delayed payment to earn investment income. The concern is the incentive created when a court gives too little scrutiny to avoidable delay.
A bona fide disagreement should protect an insurer only for the dollars and time that disagreement reasonably explains. Courts should also examine whether the insurer’s own adjustment methods created or prolonged the uncertainty. Policyholders deserve a good faith standard that promotes prompt determination and payment of ascertainable benefits. Iowa judges should demand an explanation for why those payments could not have been made earlier.
Thought For The Day
“This business produces ‘float’ – money that doesn’t belong to us, but that we get to invest for Berkshire’s benefit.”
—Warren E. Buffett, Berkshire Hathaway’s 2011 shareholder letter, dated February 25, 2012
1 Cutler v. Guardian Mut. Ins. Assoc., No. 25-1434 (Iowa App. Oct. 21, 2026).
