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34. Iowa Insurance Regulations
34.5. Iowa Property Insurance — State-Specific Rules

Iowa Auto Property Regulation and Rate Standards

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Private-Passenger Automobile Property Regulation

Iowa Code 321A.2 through .11; Iowa Code 516A.1 through .4; Iowa Admin Rule 191-15.45

Iowa regulates private-passenger auto property coverage under several statutory chapters. The Property exam tests the property-related aspects of auto insurance:

  • Iowa Code 321A.2 through .11. Iowa’s financial responsibility framework — the requirement that drivers demonstrate ability to pay for accidents they cause.
  • Iowa Code 516A.1 through .4. Iowa’s uninsured/underinsured motorist coverage framework, including the right of rejection.

Iowa Admin Rule 191-15.45 — Aftermarket Parts Regulation

Iowa permits the use of aftermarket crash parts in repair of private-passenger automobiles, subject to:

  • Disclosure to the insured. The repair estimate must clearly identify any non-OEM parts.
  • Quality standards. Aftermarket parts must be of like kind and quality to OEM parts.
  • Insurer responsibility. The insurer is responsible for the cost of correcting any inadequacy in aftermarket parts.
  • Consumer choice. The insured generally has the right to insist on OEM parts at additional cost if desired.

Iowa Rate Standards (Iowa Code 515F.4(1); 515F.5(1)(a))

Iowa Code 515F.4(1) and 515F.5(1)(a) establish the standards by which Iowa property and casualty rates are evaluated:

  • Excessive. Rates cannot be unreasonably high in relation to the benefits provided.
  • Inadequate. Rates cannot be too low to support the obligations being undertaken — protecting against insurer insolvency.
  • Unfairly discriminatory. Rates cannot differ based on characteristics that have no actuarial basis or that are prohibited by Iowa Admin Rule 191-15.11.

Iowa uses a file-and-use rate regulation system for most P&C lines: insurers file rates with IID and may begin charging them immediately, subject to IID’s after-the-fact authority to disapprove a rate that fails the three standards.

Sidenote
EXAM FOCUS — Iowa's three rate standards

Not excessive, not inadequate, not unfairly discriminatory. Iowa Code 515F.4(1) and 515F.5(1)(a) establish these three standards. The exam writes questions around all three; “unfairly discriminatory” is the standard most often missed because it requires understanding that rate differentiation by actuarial risk is permitted — only differentiation without an actuarial basis is unfair.

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Iowa Auto Property Regulation and Rate Standards

Private-Passenger Automobile Property Regulation

Iowa Code 321A.2 through .11; Iowa Code 516A.1 through .4; Iowa Admin Rule 191-15.45

Iowa regulates private-passenger auto property coverage under several statutory chapters. The Property exam tests the property-related aspects of auto insurance:

  • Iowa Code 321A.2 through .11. Iowa’s financial responsibility framework — the requirement that drivers demonstrate ability to pay for accidents they cause.
  • Iowa Code 516A.1 through .4. Iowa’s uninsured/underinsured motorist coverage framework, including the right of rejection.

Iowa Admin Rule 191-15.45 — Aftermarket Parts Regulation

Iowa permits the use of aftermarket crash parts in repair of private-passenger automobiles, subject to:

  • Disclosure to the insured. The repair estimate must clearly identify any non-OEM parts.
  • Quality standards. Aftermarket parts must be of like kind and quality to OEM parts.
  • Insurer responsibility. The insurer is responsible for the cost of correcting any inadequacy in aftermarket parts.
  • Consumer choice. The insured generally has the right to insist on OEM parts at additional cost if desired.

Iowa Rate Standards (Iowa Code 515F.4(1); 515F.5(1)(a))

Iowa Code 515F.4(1) and 515F.5(1)(a) establish the standards by which Iowa property and casualty rates are evaluated:

  • Excessive. Rates cannot be unreasonably high in relation to the benefits provided.
  • Inadequate. Rates cannot be too low to support the obligations being undertaken — protecting against insurer insolvency.
  • Unfairly discriminatory. Rates cannot differ based on characteristics that have no actuarial basis or that are prohibited by Iowa Admin Rule 191-15.11.

Iowa uses a file-and-use rate regulation system for most P&C lines: insurers file rates with IID and may begin charging them immediately, subject to IID’s after-the-fact authority to disapprove a rate that fails the three standards.

Sidenote
EXAM FOCUS — Iowa's three rate standards

Not excessive, not inadequate, not unfairly discriminatory. Iowa Code 515F.4(1) and 515F.5(1)(a) establish these three standards. The exam writes questions around all three; “unfairly discriminatory” is the standard most often missed because it requires understanding that rate differentiation by actuarial risk is permitted — only differentiation without an actuarial basis is unfair.

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