Amish Connection, Inc. rented space in a shopping center. On June 14, 2010, there were heavy rains that resulted in the rupture of a corroded interior drainpipe. The four-inch cast-iron pipe ran along the interior back wall and above the ceiling tiles. It carried rainwater from the roof to the storm sewer. The breach of the pipe resulted in 2 inches of water in the rented suite and caused substantial damage to the Amish Connection office, bathroom, and stored property including samples, inventory, office supplies, and business records. There was no damage to the exterior of the building.

Amish Connection filed a claim under its business insurance policy with State Farm Fire and Casualty Company (State Farm). State Farm denied the claim referring to the Property Subject to Limitations section of the policy: “We will not pay for loss: … (6.) to the interior of any building or structure, or the property inside any building or structure, caused by rain, snow, sleet, ice, sand, or dust, whether driven by wind or not, unless: (a.) the building or structure first sustains damage by an insured loss to its roof or walls through which the rain, snow, sleet, ice, sand or dust enters” …

Amish Connection argued that the rain was no longer “rain” once it entered the building and that the cause of the loss was due to the pipe bursting. They were seeking coverage for water damage to inventory, furnishings, equipment, and documents.

The District Court granted summary judgment in favor of State Farm and Amish Connection appealed. The Court of Appeals reversed the decision because the loss was caused by rainwater which is not excluded from coverage. Rain is considered “rain” only as it is falling and once it has landed, it is considered “rainwater”.

Amish Connection, Inc. v. State Farm Fire and Casualty Co., Supreme Court of Iowa. March 20, 2015 861, N.W.2d 230