from the Iowa District Court for Muscatine County, Paul L.
appeals a summary judgment ruling in favor of the city's
insurer pursuant to an exclusion in an all-risks insurance
A. Vickers and Scott A. Ruksakiafi of Vanek, Vickers &
Masini, P.C., Chicago, Illinois, and Amber J. Hardin of
Stanley, Lande & Hunter, Muscatine, for appellant.
M. O'Brien and Catherine M. Lucas of Bradshaw, Fowler,
Proctor & Fairgrave, P.C., Des Moines, for appellee.
by Danilson, C.J., and Doyle and Mullins, JJ.
appeals the district court's grant of summary judgment in
favor of the city's insurer. The district court concluded
the city's property damages were not covered by an
all-risks insurance policy due to the policy's
"Electrical Currents" exclusion. We affirm.
Background Facts and Proceedings
facts in this case are generally undisputed. In November
2014, a gray squirrel scampered into an electrical substation
owned by the City of West Liberty, Iowa (the City). The
property was insured by Employers Mutual Casualty Company
(EMC). The squirrel was climbing on equipment when, as the
district court found, "the squirrel found itself in a
rather shocking situation when it came into contact
simultaneously with a cable clamp energized at 7200 volts and
the grounded steel frame which supported the cable attached
to the clamp." An electrical arc was generated when the
squirrel completed the circuit. The arcing lasted thirty to
forty-five seconds,  causing substantial damage to the
City's property and short-circuiting the squirrel's
life. The City and EMC agree the squirrel created the
conductive path that resulted in an electrical arc that
caused substantial damage to equipment at the City's
City submitted a claim to EMC for the damages. EMC denied the
City's claim, citing the insurance policy's
"Electrical Currents" exclusion. Ultimately, the
City filed suit seeking a declaration that its damage was
covered under the policy. Dueling motions for summary
judgment were filed. In its analysis, the district court
[Here, ] [t]here are not two distinct events that caused
damages. While the incident might be characterized as having
two events: 1) the squirrel physically touching the
equipment, in and of itself hardly an "event, " and
2) the ensuing electrical arc, the first event of the
squirrel physically touching the equipment, by itself, did
not cause any damage. The only event that caused the damage
sought by [the City] was the electrical arc. Importantly,
[the City] does not claim, nor do the undisputed
facts show, that the squirrel did any damage to [the
City]'s property such as gnawing on a power line or
digging for nuts in a dangerous area. [The City] has
characterized the "squirrel's actions" as
"not excluded under the policy." The Court cannot
conclude that the "squirrel's actions" were a
cause of the damages because the squirrel did not actually
do anything to cause damages; it merely touched some
things it should not have touched. The arc caused all of the
damages. Had the squirrel done what it had done and the arc
not occurred, there would be no damages. Because there are
not two different damage-causing events, the Court need not
engage in an efficient proximate cause analysis. If an
efficient proximate cause analysis was appropriate, the Court
would find that the arcing was the dominant cause.
granting summary judgment in favor of EMC, the district court
The squirrel's presence was merely a legal cause of the
chain of events that ensued afterwards. The squirrel by
itself did not cause any damage. Rather, the sole cause of
damage to [the City]'s property was the electrical arc.
The Policy excludes coverage for damage caused by an
electrical arc. Therefore, the Policy does not require [EMC]
to cover the damage caused on November 7, 2014.
court also denied the City's motion for partial summary
City now appeals the court's ruling.
Standard of Review
review a summary judgment ruling interpreting an insurance
policy for correction of errors at law. See Just v.
Farmers Auto. Ins. Ass'n, 877 N.W.2d 467, 471 (Iowa
2016). A grant of summary judgment is only proper if no
genuine issue of material fact exists and the moving party is
entitled to judgment as a matter of law. See Iowa R.
Civ. P. 1.981(3); Villarreal v. United Fire & Cas.
Co., 873 N.W.2d 714, 719 (Iowa 2016). If the dispute
concerns only the legal consequences of undisputed facts,
summary judgment is appropriate. See Nelson v.
Lindaman, 867 N.W.2d 1, 6 (Iowa 2015). "We view the
evidence in the light most favorable to the nonmoving party,
who is entitled to every legitimate inference that we may
draw from the record." Id. at 6-7.
Applicable Insurance Contract Principles
standards for interpreting and construing insurance policies
are well established. When scrutinizing an insurance policy,
we must observe the differences between interpretation and
construction of an insurance policy. Interpretation requires
us to give meaning to contractual words in the policy. Policy
interpretation is always an issue for the court, unless we
are required to rely upon extrinsic evidence or choose
between reasonable inferences from extrinsic evidence. If the
policy does not define a term, we give the word its ordinary
meaning. The plain meaning of the insurance contract
Construction is the process of giving legal effect to a
contract. This is always a matter of law for the court. The
cardinal rule of construing insurance policies is that except
in cases of ambiguity, the intent of the parties must
control, and the court determines the intent of the parties
by looking at what the policy itself says. We consider the
parties' intent at the time the policy was sold, not in
hindsight. We will not strain the words or phrases of the
policy in order to find liability that the policy did not
intend and the insured did not purchase.
Under an objective test, a policy is ambiguous if the
language is susceptible to two reasonable
interpretations. We read the policy as a whole when
determining whether the contract has two equally plausible
interpretations, not seriatim by clauses. This stems from the
concept that [w]ords in an insurance policy are to be applied
to subjects that seem most properly related by context and
applicability. Accordingly, reading the contract as a whole
requires us to consider all declarations, riders, or
. . . . We will not interpret an insurance policy to render
any part superfluous, unless doing so is reasonable and
necessary to preserve the structure and format of the
provision. Moreover, we interpret the policy language from a
reasonable rather than a hypertechnical viewpoint.
If the policy is ambiguous, we adopt the construction most
favorable to the insured. This same rule applies when an
exclusion is ambiguous, because [a]n insurer assumes a duty
to define any limitations or exclusionary clauses in clear
and explicit terms. Thus, we strictly construe exclusions
against the insurer. We do so because insurance policies
constitute adhesion contracts.
An insurance policy is not ambiguous, however, just because
the parties disagree as to the meaning of its terms. If an
insurance policy and its exclusions are clear, the court will
not write a new contract of insurance for the parties.
Boelman v. Grinnell Mut. Reinsurance Co., 826 N.W.2d
494, 501-02 (Iowa 2013) (alterations in original) (internal
citations and quotation marks omitted).
insured who has experienced loss seeks coverage under an
insurance policy, the burden of proof initially is on the
insured to prove that both the property and the peril were
covered by the terms of the policy. See, e.g.,
Henschel v. Hawkeye-Sec. Ins. Co., 178 N.W.2d 409,
418-20 (1970); 17A Steven Plitt et al., Couch on
Insurance § 254:11 (3d ed. Dec. 2017 update)
[hereinafter Couch on Insurance]; 46 C.J.S.
Insurance § 1525 (Feb. 2018 update). If the
insured meets the initial burden, it is then that the burden
shifts to the insurer to prove any claimed exclusion or
exception to the coverage. See W. Bend Mut. Ins.
Co. v. Iowa Iron Works, Inc., 503 N.W.2d 596, 598-99
(Iowa 1993); Long v. Glidden Mut. Ins. Ass'n,
215 N.W.2d 271, 274 (Iowa 1974); 17A Couch on
Insurance § 254:12; 46 C.J.S. Insurance
§ 1525 (Feb. 2018 update); 5 Jeffery E. Thomas &
Susan Lyons, New Appleman on Insurance Law Library
Edition § 41.02[b][i] (Sept. 2017 update)
[hereinafter Appleman] ("Once the insured makes
a prima facie showing that the all-risks coverage
exists and there is damage to or loss of the covered
property, the burden shifts to the insurer to demonstrate
that the damage or loss falls within one of the exclusions
listed in the policy.").
begin our analysis by looking at the insuring agreement
itself to determine if the "policy affords coverage
under a particular set of circumstances." See
Nat'l Sur. Corp. v. Westlake Invs., LLC, 880 N.W.2d
724, 739 (Iowa 2016). The relevant provisions of the
insurance policy at issue provide:
. . . .
"We" cover direct physical loss to covered property
at a "covered location" caused by a covered peril.
. . . .
"We" cover risks of direct physical loss unless the
loss is limited or caused by a peril that is excluded.
. . . .
2. "We" do not pay for loss or damage that is
caused by or results from one or more of the following
excluded causes or events:
. . . .
g. Electrical Currents - "We" do
not pay for loss caused by arcing or by electrical currents
other than lightning. But if arcing or electrical currents
other than lightning result in fire, "we" cover the
loss or damage caused by that fire.
"We" do cover the direct loss by a covered peril
which occurs at "covered locations" as a result of
any power interruption or other utility services.
exclusion does not apply to "computers."
insurance policy at issue is an all-risks policy. "[A]n
'all-risks' policy covers any risk of direct physical
loss or damage to the covered property unless specifically
excluded by the policy." Appleman §
41.02[a]. "Under an 'all risk' property
insurance policy, losses to covered property caused by any
and all perils, or risks, are covered, unless the loss is
caused by a peril that is expressly and unambiguously
excluded by the policy." Id. § 44.02.
"The term 'peril' or 'risk' refers to
'fortuitous, active, physical forces such as lightning,
wind, and explosion, which bring about the loss."
Id. § 44.02.
An "all-risk" policy creates coverage of a type not
ordinarily present under other types of insurance, and
recovery is allowed for fortuitous losses unless the loss is
excluded by a specific policy provision; the effect of such a
policy is to broaden coverage, and a fortuitous event is one
which, to the knowledge of the parties, is dependent upon
10A Couch on Insurance § 148:50.
"[U]nder all-risk policies a loss or damage arising from
a fortuitous event, that is, one that is unexpected and not
probable, and caused by an external force, that is, not
resulting from an internal characteristic of the property, is
covered under such a policy unless specifically excluded . .
Massey Draper, Annotation, Coverage Under All-Risk
Insurance, 30 A.L.R.5th 170, § 2(a) (1995);
accord 10A Couch ...