Squirrel Damage / IA Sup. Ct.

Electrical Currents Exclusion Bars Coverage for Damage to City’s Power Station

In a unanimous decision, the Supreme Court of Iowa, applying Iowa law, affirmed the appellate court’s ruling that an electrical currents exclusion applied to bar coverage for property damage resulting from an electrical arc that was triggered by a squirrel.  

In November 2014, a squirrel entered an electrical power plant in the City of West Liberty, Iowa. After climbing onto the equipment, the squirrel triggered an electrical arc that killed it and caused more than $200,000 in damage to the facility.

Following the incident, the City sought coverage from Employers Mutual Casualty Company (“EMC”) under its all-risks insurance policy.  EMC, however, denied coverage based on an “electrical currents” exclusion in the policy.  The City filed suit against EMC, seeking declaration that its damage was covered under the policy.  While EMC argued that the policy clearly excluded losses for damages caused by arcing, the City contended that the squirrel was an efficient proximate cause of the City’s loss, and the loss was therefore covered under the policy. On summary judgement, the court sided with EMC, holding that the electrical arcing was the “sole cause” of damage.  Therefore, the electrical currents exclusion applied.  The City appealed, but the appellate court affirmed. The City appealed to the Supreme Court of Iowa arguing that the lower courts should have conducted an efficient proximate cause analysis.  The Supreme Court of Iowa disagreed, stating that an efficient proximate cause analysis is inappropriate because there weren’t two independent causes of the city’s loss.  Instead, the squirrel simply triggered the sole cause of the loss – electrical arcing. As such, the Supreme Court affirmed the decisions of the appellate court and the district court.  City of W. Liberty v. Employers Mut. Cas. Co., No. 16-1972 (Iowa Feb. 1, 2019).