Court Opinion

ID: 4249485
Source: CourtListenerOpinion
Date Created: 2018-02-28 21:18:58.099448+00
Date Added: 2024-06-11T07:48:11.905430
License: Public Domain

IN THE SUPREME COURT OF IOWA
                               No. 12–0650

                            Filed May 17, 2013

FARM BUREAU LIFE INSURANCE COMPANY,

      Appellant,

vs.

HOLMES MURPHY & ASSOCIATES, INC.,

      Appellee.

      Appeal from the Iowa District Court for Polk County, Arthur E.

Gamble, Judge.

      Plaintiff–insurance company appeals district court’s grant of

summary judgment in a negligence action against an insurance broker.

AFFIRMED.

      Jason T. Madden and Thomas M. Boes of Bradshaw, Fowler,

Proctor & Fairgrave, P.C., Des Moines, and James A. Pugh of Munro Law
Office, P.C., Des Moines, for appellant.

      Matthew J. Dendinger and Lewis K. Loss of Loss, Judge & Ward,

LLP, Washington, DC, and Richard A. Malm of Dickinson, Mackaman,

Tyler & Hagen, P.C., Des Moines, for appellee.
                                              2

HECHT, Justice.

       A husband and wife applied for life insurance policies from Farm

Bureau Life Insurance Company.               The applicants later sued Farm

Bureau alleging it negligently failed to notify them of their HIV-positive

status. Farm Bureau settled the negligence claims, sued its insurers for

indemnity, and sued its insurance broker for breach of contract and

negligence in failing to provide timely notice to the insurers. We affirmed

a summary judgment in favor of the insurers on the ground Farm

Bureau had failed to give them timely notice of the applicants’ liability
claims. Farm Bureau Life Ins. Co. v. Chubb Custom Ins. Co., 780 N.W.2d
735 (Iowa 2010).

       Thereafter the district court granted summary judgment for the

broker after concluding that even if the insurers had been given timely

notice of the applicants’ tort claims against Farm Bureau, coverage for

those claims would have been precluded under two separate exclusions.

Farm Bureau has again appealed.              As we conclude the underwriting

exclusion precluded coverage for the applicants’ claims, we affirm the

district court’s ruling.

       I. Factual and Procedural Background.

       The events giving rise to the present dispute commenced in

Wyoming in October 1999 when John and Mary Smith1 applied for life

insurance through Farm Bureau.               Farm Bureau denied the Smiths’

applications for life insurance after a blood screening revealed they were

both infected with the Human Immunodeficiency Virus (HIV).                          In

November 1999 Farm Bureau sent the Smiths a letter informing them

       1As  information pertaining to communicable and infectious diseases is generally
confidential, see, e.g., Iowa Code chapters 139A and 141A (2009), we use pseudonyms
in this instance as we did in the earlier appeal. See Farm Bureau, 780 N.W.2d at 737
n.1.
                                              3

their applications were denied “due to the blood profile results” and

requesting authorization to disclose the results to their physician(s). The

Smiths    did    not   respond     or   grant     Farm   Bureau      the   requested

authorization, and they did not discover their HIV-positive status until

July 2001.

       The Smiths filed a complaint in June 2002 in Wyoming Federal

District Court alleging Farm Bureau and other parties involved in the

analysis of the blood samples were negligent in:

       (1) failing to report the HIV-positive status to the State of
       Wyoming; (2) failing, in violation of Wyoming common law, to
       report the HIV-positive results to them; and (3) failing to
       inform them before their blood was drawn that Farm Bureau
       would not tell them if the blood tests were positive for HIV.

Id. at 737. The Smiths sought damages for loss of present and future

income, bodily injury, past and future pain and suffering, mental

anguish, loss of enjoyment of life, total disability, inability to care for

themselves as their diseases progressed, and other general damages.2

       The federal district court concluded Farm Bureau owed no legal

duty to inform the Smiths of their HIV-positive status and granted Farm

Bureau’s motion for summary judgment.               The Smiths appealed to the

United States Court of Appeals for the Tenth Circuit, which reversed the
summary judgment order. The court held:

       [I]f  an    insurance     company,     through    independent
       investigation by it or a third party for purposes of
       determining policy eligibility, discovers that an applicant is
       infected with HIV, the company has a duty to disclose to the
       applicant information sufficient to cause a reasonable
       applicant to inquire further.

Pehle v. Farm Bureau Life Ins. Co., 397 F.3d 897, 900 (10th Cir. 2005).

       2The complaint also alleged that by July 2001 the condition of one of the Smiths
had progressed to Acquired Immunodeficiency Syndrome (AIDS) and the condition of
the other had deteriorated to total disability.
                                         4

      The Smiths then filed an amended complaint in Wyoming district

court seeking punitive damages and alleging Farm Bureau had breached

the legal duty recognized by the Tenth Circuit. The damages the Smiths

alleged in their amended complaint were similar to those alleged in the

original complaint and included: “loss of past, present, and future

income”; past and future “pain and suffering, mental anguish, loss of

enjoyment of life, psychological damage, total disability, inability to care

for themselves as the disease progresse[d], and other general damages.”

In June 2006 Farm Bureau and the Smiths reached a confidential
settlement agreement and the suit was dismissed.

      Farm Bureau subsequently sought indemnity, for the amounts

paid in settling the Smiths’ claims, under an Insurance Company

Professional Liability (ICPL) policy issued by Federal Insurance Company

(Federal) and in effect at the time the Smiths filed their lawsuit. Under

Insuring Clause 1 of the ICPL policy Federal was obligated:

      To pay on behalf of the Insureds for Loss which the Insureds
      shall become legally obligated to pay as a result of any Claim
      first made against the Insureds during the Policy Period or, if
      elected, the Extended Reporting Period, arising out of any
      Wrongful Act committed by the Insureds or any person for
      whose acts the Insureds are legally liable during or prior to
      the Policy Period while performing Insurance Services
      including the alleged failure to perform Insurance Services.

      Insuring Clause 2 of the same policy covered Farm Bureau for

wrongful acts committed while performing financial services.

      The policy defined “a claim” as:

      a. a written demand for monetary damages;

      b. a civil proceeding commenced by the service of a
         complaint or similar pleading;

      c. a criminal proceeding commenced by the return of an
         indictment; or
                                                  5
       d. a formal administrative or regulatory proceeding brought
          by or on behalf of policyholders or customers commenced
          by the filing of a notice of charges, formal investigative
          order, or similar document.

       The policy required written notice to Federal of claims “as soon as

practicable, but in no event later than ninety (90) days after the

termination of the policy period.”3

       Farm Bureau notified its insurance broker, Holmes Murphy &

Associates, Inc., of the Smiths’ claims on February 11, 2003. Holmes

Murphy did not notify Federal about the claims, however, until more

than two years after the ICPL policy notice period had expired.                    Farm

Bureau, 780 N.W.2d at 740.

       By letter dated April 1, 2005, Federal denied coverage based on

Farm Bureau’s failure to provide timely notice of the Smiths’ claims.

Federal also denied coverage based on the policy’s exclusions for claims

“for bodily injury”4 and claims “based upon, arising from, or in

consequence of the underwriting of insurance” (the “underwriting

exclusion”).5

       3The policy period for the policy in effect at the time the Smiths filed their suit
against Farm Bureau ended February 15, 2003.
       4The   bodily injury exclusion provided:
       The Company shall not be liable to make any payment for Loss in
       connection with any Claim made against the Insureds:
       ....
       g. for bodily injury, mental or emotional distress, sickness, disease, or
          death of any person; provided however, this Exclusion shall not apply
          to a Claim based solely on the Insured’s failure to provide Insurance
          Services.
       5The   underwriting exclusion provided:
       The Company shall not be liable to make any payment for Loss in
       connection with any Claim made against the Insureds:
       ....
       k. based upon, arising from, or in consequence of the underwriting of
          insurance, including any decisions involving the classification,
                                             6

       Farm Bureau filed suit against Federal and Holmes Murphy.6 We

affirmed a summary judgment in favor of Federal on the ground Farm

Bureau had failed to timely notify Federal of the Smiths’ claims as

required by the ICPL policy. Id. at 744.

       Farm Bureau then filed an amended petition against Holmes

Murphy alleging breach of contract and negligence for failing to provide

Federal with notice of the Smiths’ claims. The parties stipulated that, in

the interest of judicial efficiency, the court would first determine whether

the ICPL policy would have covered Farm Bureau for the Smiths’ claims
had Holmes Murphy given Federal timely notice. Both parties moved for

summary judgment.         The district court granted summary judgment in

favor of Holmes Murphy, concluding the bodily injury and underwriting

exclusions in the ICPL policy would have precluded coverage even if

Federal had received timely notice of the Smiths’ claims. Farm Bureau

appeals.

       II. Scope of Review.

       We review rulings on summary judgment motions for correction of

errors of law. Id. at 739. Summary judgment is only appropriate when a

“moving party has affirmatively established the existence of undisputed

facts entitling that party to a particular result under controlling law.”

Travelers Indem. Co. v. D.J. Franzen, Inc., 792 N.W.2d 242, 245–46 (Iowa

2010) (alteration, citation, and internal quotation marks omitted). When

no extrinsic evidence is offered on the meaning of language in a policy,

___________________________
           selection, or renewal of risks as well as the rates and premiums
           charged to insure or reinsure risks . . . .
       6Farm   Bureau also named Great Northern Insurance Company as a defendant
in the action. Great Northern had issued a policy covering liability arising from Farm
Bureau’s acts or omissions as a financial institution. Farm Bureau’s claim under that
policy was rejected in the earlier appeal, Farm Bureau, 780 N.W.2d at 742–44, and is
not at issue in this appeal.
                                          7

interpretation and construction of an insurance policy are questions of

law for the court. Farm Bureau, 780 N.W.2d at 739.

      III. Discussion.

      The parties advance diverging interpretations of the bodily injury

and underwriting exclusions found in the ICPL policy.        While at least

some, if not all, of the damages the Smiths seek against Farm Bureau

may be characterized as losses in connection with a claim for bodily

injury and would therefore be excluded from coverage under the policy’s

bodily injury exclusion, we need not decide whether that exclusion is
dispositive. Instead, we conclude the underwriting exclusion precludes

coverage for any of the Smiths’ claims.

      The controlling consideration in construction of insurance policies

is the intent of the parties.   Thomas v. Progressive Cas. Ins. Co., 749
N.W.2d 678, 681 (Iowa 2008). We determine intent by what the policy

itself says except in cases of ambiguity. A.Y. McDonald Indus., Inc. v. Ins.

Co. of N. Am., 475 N.W.2d 607, 618 (Iowa 1991). Ambiguity exists when

the language of a policy is susceptible to more than one reasonable

interpretation.   First Newton Nat’l Bank v. Gen. Cas. Co. of Wis., 426
N.W.2d 618, 628 (Iowa 1988).      We read the insurance contract in its

entirety, rather than reading clauses in isolation, to determine whether a

policy provision is subject to two equally proper interpretations. Thomas,
749 N.W.2d at 681. We refrain from straining the meaning of the words

and phrases of the policy to avoid imposing liability that was not

intended and coverage that was not purchased. Id. at 682.

      When words are left undefined in a policy, we give them their

ordinary meanings—meanings which a reasonable person would give
them. A.Y. McDonald, 475 N.W.2d at 619. We do not typically give them

meanings only specialists or experts would understand. City of Spencer
                                          8

v. Hawkeye Sec. Ins. Co., 216 N.W.2d 406, 408–09 (Iowa 1974).             In

searching for the ordinary meanings of undefined terms in insurance

policies we commonly refer to dictionaries.           See, e.g., Witcraft v.

Sundstrand Health & Disability Grp. Benefit Plan, 420 N.W.2d 785, 788

(Iowa 1988) (meaning of “illness”); N. Star Mut. Ins. Co. v. Holty, 402
N.W.2d 452, 455 (Iowa 1987) (meaning of “apparatus”).          If a word is

susceptible to two interpretations, typically we adopt an interpretation

favoring the insured.      A.Y. McDonald, 475 N.W.2d at 619.           Mere

disagreement, however, as to the meaning of the terms, does not
establish ambiguity.      Id.   Instead we examine whether the policy

language, viewed objectively, is fairly susceptible to two interpretations.

Id.   Ultimately, if there is no ambiguity, the court will not rewrite the

policy for the parties. Thomas, 749 N.W.2d at 682.

        In construing the underwriting exclusion at issue here, we

acknowledge the specific words introducing a word or phrase may have

implications for our construction. See, e.g., Am. Family Mut. Ins. Co. v.

Corrigan, 697 N.W.2d 108, 112 (Iowa 2005). Some liability policies—like

the one issued by Federal to Farm Bureau—exclude from coverage claims

“arising from” an excluded cause.        Other policies may more narrowly

exclude coverage of claims “for” an excluded cause. We have said that

while    phrases   like “arising   out   of” should   be   given “a   broad,

comprehensive meaning” in a coverage clause, such language may be

read more narrowly in an exclusionary clause. Tacker v. Am. Family Mut.

Ins. Co., 530 N.W.2d 674, 677 (Iowa 1995). In cases giving “arising from”

exclusions their ordinary meaning, “arising from” and “arising out of”

language has been construed to mean “originating from, having its
                                              9

origins in, growing out of, or flowing from.”7              Callas Enters., Inc. v.

Travelers Indem. Co. of Am., 193 F.3d 952, 955–56 (8th Cir. 1999)

(citation and internal quotation marks omitted) (applying Minnesota law);

see also Spirtas Co. v. Fed. Ins. Co., 521 F.3d 833, 835–36 (8th Cir. 2008)

(applying Missouri law, explaining “arising from” in exclusion means

“flowed from” or “had [its] origins in” (citation and internal quotation

marks omitted)); Allstate Ins. Co. v. Pierce, 271 F. App’x 416, 417–18 (5th

Cir. 2008) (applying Mississippi law, explaining “arising out of” in

exclusion means “originating from, having its origin in, growing out of, or
flowing from” (citation and internal quotation marks omitted)); United

Nat’l Ins. Co. v. Penuche’s, Inc., 128 F.3d 28, 31 (1st Cir. 1997) (applying

New Hampshire law, explaining phrase “arising out of” in exclusion “is a

very broad term meaning originating from or growing out of or flowing

from” but not “so broad as to encompass a ‘tenuous’ connection” (citation

and internal quotation marks omitted)).

       With these propositions in mind, we examine the language of the

underwriting exclusion and the nature of the Smiths’ claims.                     Farm

Bureau contends the language of the exclusion renders it inapplicable to

the Smiths’ claims because they were unrelated to the function of

underwriting described in the policy.               Noting the language of the

underwriting exclusion is not limited to claims based on Farm Bureau’s

failure to issue life insurance policies to the Smiths or the manner in

which Farm Bureau decided against insuring the Smiths’ lives, Holmes

       7We   acknowledge a phrase like “arising out of” may be given a narrower scope in
an exclusion when a court finds the exclusion ambiguous and therefore determines the
phrase means “proximately caused by.” See Norwalk Ready Mixed Concrete, Inc. v.
Travelers Ins. Cos., 246 F.3d 1132, 1138 (8th Cir. 2001). As we explain, however, we
find the plain meaning of the underwriting exclusion here unambiguous.
                                        10

Murphy counters that the Smiths’ claims clearly arose from Farm

Bureau’s underwriting activity.

       The ICPL policy does not define “underwriting.” The language of

the underwriting exclusion itself is instructive nonetheless, exempting

from   coverage   claims   arising   from,   or   in   consequence   of   “the

underwriting of insurance, including any decisions involving the

classification, selection, or renewal of risks.” As we have noted, we will

not give undefined policy terms technical meanings.         Instead, we give

them their ordinary meanings and look to dictionaries and caselaw for
guidance.   A.Y. McDonald, 475 N.W.2d at 619.           Farm Bureau offers

several dictionary definitions of “underwriting,” the most descriptive of

which is “the process of examining, accepting or rejecting insurance

risks, and classifying those selected in order to charge the proper

premium for each.” Harvey W. Rubin, Barron’s Dictionary of Insurance

Terms 551 (6th ed. 2013). Holmes Murphy notes, and we agree, that this

dictionary definition is consistent with the express language of the

exclusion at issue in this case and definitions applied by courts in other

jurisdictions. See, e.g., Mich. Millers Mut. Ins. Co. v. Fid. & Deposit Co. of

Md., 809 F. Supp. 2d 703, 711 (W.D. Mich. 2011) (underwriting is

“decision regarding which entities to insure”); In re PMA Capital Corp.

Sec. Litig., No. 03–6121, 2005 WL 1806503, at *2 (E.D. Pa. 2005)

(“underwriting[] involves the identification and selection of risks and the

determination of an adequate price of insuring those risks given the

expected losses”); Hosp. Corp. of Am. & Subsidiaries v. Comm’r of Internal

Revenue, 74 T.C.M. 1020, 1997 WL 663283, at *2 (T.C. 1997)

(“Underwriting is the selection and pricing of risks to be insured.”);
Thomas C. Cady & Georgia Lee Gates, Post Claim Underwriting, 102 W.

Va. L. Rev. 809, 812 (2000) (underwriting includes “a risk assessment
                                          11

conducted[] pre-issuance and pre-loss”). But cf. Vincent v. Safeco Ins. Co.

of Am., 29 P.3d 943, 945 (Idaho 2001) (“Underwriting is . . . the process

by which insurance companies determine whether the risk assumed is

worth the premium received.”); Black’s Law Dictionary 1665 (9th ed.

2009) (Underwriting is “[t]he act of assuming a risk by insuring it; the

insurance of life or property.”).

       Insurers typically ask questions regarding an applicant’s medical

background as part of the underwriting process of determining which

persons or risks to insure. U.S. Congress Office of Tech. Assessment,
Aids and Health Insurance: An OTA Survey, Leaflet No. 2, at 1 (1988).

They may gather records regarding an applicant’s past and current

medical condition from an attending physician.       Id.   They may even

require an applicant undergo physical examination and medical testing.

Id.   Using all this information, insurers engaged in the underwriting

process will determine not only whether to insure an applicant, but will

also determine the applicable premiums in any given case and may try to

limit potential costs and liabilities. Id. at 2.

       Despite this common understanding of underwriting and its

associated activities, Farm Bureau contends an appropriate construction

of the underwriting exclusion cannot defeat coverage for the Smiths’

claims because they were “factually distinct” from claims that would

arise from the underwriting of insurance. In other words, Farm Bureau

explains, the Tenth Circuit never suggested the Smiths’ claims were for

Farm Bureau’s violation of a duty in its decision not to issue life

insurance policies, and thus, the claims could not have arisen from

underwriting.     Holmes Murphy counters the district court correctly
concluded the Smiths’ claims “involved the failure of Farm Bureau, a life

insurance company, to properly notify an applicant for life insurance of
                                          12

the results of the life insurance underwriting.” Further, Holmes Murphy

contends, the exclusion is not narrowly limited to claims for failure to

issue a policy or claims regarding the manner in which a decision has

been reached, but instead expressly extends more broadly to claims

“arising from” underwriting activities.

      Given the ordinary definition of underwriting and its associated

activities, we cannot conclude Farm Bureau’s eligibility investigation and

management of information derived from it were outside the scope of the

underwriting exclusion here.      We acknowledge that when viewed in
isolation, a procedure for extraction and examination of blood might not,

by itself, constitute underwriting activity.   Nevertheless, we are tasked

here—according to the plain language of the policy and the exclusion—

with determining whether the Smiths’ claims arose out of Farm Bureau’s

alleged breach of a duty, and whether that duty arose from or was in

consequence of Farm Bureau’s underwriting activity. The Tenth Circuit’s

analysis of the Smiths’ claims, when examined in conjunction with the

ordinary definition of underwriting, aids us in answering both inquiries.

      The basis for the viability of the Smiths’ claims under Wyoming

law, according to the Tenth Circuit, is Farm Bureau’s affirmative duty to

disclose sufficient information to its applicant in the event Farm Bureau

discovers in the course of its eligibility investigation the applicant is HIV

positive. Pehle, 397 F.3d at 903. That duty arose in this case because of

the nature of Farm Bureau’s relationship with the Smiths.         The Farm

Bureau–Smith relationships were special, explained the Tenth Circuit,

because Farm Bureau had encouraged the Smiths’ purchases of the life

insurance policies, elicited their further trust by subjecting them to the
blood extraction and investigation, and as a result possessed information

of vital importance to the Smiths’ health and safety.          Id.   Having
                                               13

considered these circumstances, the Tenth Circuit concluded the

affirmative    duty     will   arise   “if   an     insurance    company,       through

independent investigation by it or a third party for purposes of

determining policy eligibility, discovers that an applicant is infected with

HIV.”    Id.    In other words, the Tenth Circuit concluded both Farm

Bureau’s duty to reveal the information and the Smiths’ claims arose out

of the activities Farm Bureau undertook to determine the Smiths’

eligibility for insurance.       That conclusion is instructive here.              Farm

Bureau’s duty arose from its routine eligibility investigation, including
analysis of the applicants’ blood.           Id. at 899.      We think the Smiths’

claims, therefore, fall squarely within the range of claims contemplated

by the underwriting exclusion.

        Two additional pieces of intrinsic evidence from the ICPL policy

bolster the conclusion that the underwriting exclusion precluded

coverage for the acts or omissions forming the basis of the Smiths’ claims

against Farm Bureau. Farm Bureau’s investigation and determination of

policy eligibility are fairly characterized as aspects of its classification

and selection of risk, which are specifically enumerated in the language

of the underwriting exclusion. We are not persuaded by Farm Bureau’s

contention that the claim here is not for identification of or failure to

identify a risk, but for failure to notify.8 Farm Bureau’s failure to notify

was actionable only if a duty to reveal the information was owed. The

duty recognized by the Tenth Circuit arose because of the nature of the

        8Farm Bureau’s reliance on a Texas case involving an insured party not engaged

in the practice of underwriting for the proposition that the claim here does not arise out
of underwriting activity is unavailing. See HCC Empl’r Servs., Inc. v. Westchester Cnty.
Surplus Lines Ins. Co., No. H-05-1275, 2006 WL 1663343, at *5 (S.D. Tex. 2006)
(holding negligent failure to notify regulatory body of lapse of insurance policy did not
arise out of underwriting of insurance). Indeed, that court hinted its analysis may have
been different had the insured party done the underwriting that gave rise to the claim.
Id.
                                              14

special relationship between the parties. The special relationship arose

as a result of Farm Bureau’s policy eligibility investigation and the

information it derived from the investigation.                  Id. at 903 (noting

insurance companies need not exist to treat or diagnose HIV for the duty

to arise).

       The policy’s definition of “insurance services,” from which any

claim covered by the policy must arise, further supports the conclusion

the underwriting exclusion precludes coverage for the Smiths’ claims

against Farm Bureau.           Insurance services are defined as only those
services rendered in the conduct of “claims handling and adjusting,

insurance risk management; safety engineering; inspection and loss

control operations; personal injury rehabilitation operations; salvage

operations; recovery subrogation services; premium financing operations;

actuarial consulting services; or insurance pool management” and did

not include “medical or health care services” or other enumerated

professional services.       Farm Bureau’s contention that the duty and

claims here relate “only to notification of medical test results” neglects

both the policy’s “insurance services” prerequisite for coverage and the

policy’s express exclusion of medical services from the definition of

insurance services.

       We conclude under the facts here and the express provisions of the

ICPL policy that the duty recognized by the Tenth Circuit and the Smiths’

resulting claims arose out of Farm Bureau’s underwriting activity.9 The

       9Farm   Bureau suggests the Tenth Circuit’s justification for finding the
affirmative duty to notify—namely, the trust and confidence the Smiths reposed in
Farm Bureau—precludes us from determining the Smiths’ claims arose out of Farm
Bureau’s underwriting activity. We disagree. If indeed there were relationships of trust
and confidence here, we think it reasonable to conclude they were a consequence of
Farm Bureau’s eligibility investigation activity, which was “underwriting” activity under
the ordinary meaning of the word. That trust and confidence may arise in relationships
                                         15

underwriting exclusion therefore precludes coverage for damages claimed

by the Smiths against Farm Bureau.

      Finally, we note Farm Bureau further contends the underwriting

injury exclusion will, if given its literal, ordinary meaning, render the

ICPL policy illusory.   Cf. First Newton Nat’l Bank, 426 N.W.2d at 629

(giving policy terms their literal, ordinary meaning and noting that an

alternate construction “would rob the insured of the very coverage he

assumed he was getting” (citation and internal quotation marks

omitted)).   Holmes Murphy disputes this contention, arguing that
coverage remains for (1) the vast majority of all claims for wrongful

conduct that might arise from the performance of insurance services,

and (2) most, if not all claims that might arise from the performance of,

or failure to perform, financial services (which are covered by the second

coverage clause in the policy).        More specifically, Holmes Murphy

explains that coverage for retirement planning and investment services,

covered by the financial services clause, would not be precluded by the

underwriting exclusion. We take no position regarding the application of

the policy’s various exclusions to scenarios not presented in this appeal,

but note that Holmes Murphy has identified a specific group of claims

that may be covered by the ICPL policy here. See Vincent, 29 P.3d at 948

(explaining if an identifiable group may collect on a policy, insurance is

not illusory). We are not persuaded the ICPL coverage is so narrowed by

the exclusions as to be illusory.      Moreover, we are bound to decide

coverage questions in view of the ICPL policy’s provisions and the

allegations of the Smiths’ complaint against Farm Bureau. See Stover v.

State Farm Mut. Ins. Co., 189 N.W.2d 588, 592 (Iowa 1971). The terms of
___________________________
outside the insurance context does not change the nature of their origin in the
circumstances here.
                                           16

the underwriting exclusion are unambiguous.         We will not add to or

subtract from the parties’ contract based on public policy considerations

in the absence of legislative, regulatory, or prior judicial statement of

those considerations. Am. Family Mut. Ins. Co., 697 N.W.2d at 117.

      IV. Conclusion.

      The   district   court   correctly    concluded   the   ICPL   policy’s

underwriting exclusion would have precluded coverage for the Smiths’

claims even if Federal had been timely notified under the policy’s notice

requirement.    Accordingly, we affirm the district court’s summary
judgment in favor of Holmes Murphy.

      AFFIRMED.