Langwith v. American National General Insurance Co.

1. An umbrella policy can be understood as a composite of a DIC (difference in conditions) policy and an XS (excess policy). The umbrella will provide higher limits than the primary policy for events covered by the policy. It's thus like an XS policy. But it will also cover at least some things that the primary policy excludes, at least above some limit. It is thus like a "difference in conditions" policy. 

2. To some extent, this case is about "default rules," a subject I hope you studied in your contracts class or elsewhere.  If not, read this: https://lsolum.typepad.com/legaltheory/2012/09/legal-theory-lexicon-default-rules-and-completeness.html. The issue is the allocation of responsibility to find a policy that is "suitable" for the risks facing the insured. The Collegiate concept is that, by default, the obligation falls on the insured to communicate the risks to the agent; the agent does not have a duty either to ferret out risks or to minimize those risks. Sandbulte goes further and says the only way to escape the default rule is for the insured to pay the agent separate compensation for advice. This case changes the Sandbulte rule and uses a multi-factor test, of which separate compensation is only a part, to determine whether the parties have escaped the default.

3. As Professors Abraham and Schwarcz note in their casebook, the Iowa legislature repudicated Langwith and restored the Sandbulte standard. As a legislator, what would you have done? Why? Should courts change default rules in the commercial context unless there is a really, really good reason?