The Rights of an Innocent Co-Insured to Insurance Proceeds When Another Insured Attempted Fraud

A Video Dealing With the So-Called "Innocent" Co-Insured

When denying a claim for fraud, it is necessary to determine if there are any innocent co-insureds, and if so, whether the innocent co-insured is entitled to any indemnity.

The question whether arson by one coinsured spouse bars the innocent coinsured spouse from recovering under an insurance policy was one of first impression in Iowa [Vance v. Pekin Ins. Co., 457 N.W.2d 589 (Iowa, 1990)]. The Supreme Court noted that courts across the United States have developed three distinct theories of recovery to resolve the question. Several years ago, one writer critically examined those theories and the rationales for them. [The Problem of the Innocent Coinsured Spouse: Three Theories of Recovery, 17 Val.U.L.Rev. 849 (1983) [hereinafter Innocent Coinsured Spouse].]

It is still the well-settled law in Iowa that the use of the words, “any insured,” is an unambiguous phrase that precludes coverage for all insureds, including an innocent coinsured spouse.  If “any insured” sets fire to a house, all insureds, including the innocent coinsured spouse, are barred compensation. In Johnson v. Farm Bureau Mut. Ins. Co., 533 N.W.2d 203, 207 (Iowa 1995) the court held that “any insured” resulted in denial of coverage to all insureds under the exclusion for bodily injury. The Iowa Supreme Court, in Vance, supra. went so far as to encourage insurance companies to purge their fire insurance policies of ambiguity by replacing the exclusion language of “the” insured with “a,” “any,” or “an” insured. Insurance companies were slow to follow the recommendation while many adopted the suggested language.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/ Read posts from Barry Zalma at https://parler.com/profile/Zalma/posts; and the last two issues of ZIFL at https://zalma.com/zalmas-insurance-fraud-letter-2/  podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4