Prejudgment Interest Rules in Iowa
At a glance
| Governing law | Iowa Code § 535.3(1)(a) sets the general judgment-rate cross-reference; § 668.13 governs actions under the comparative-fault chapter; § 669.4(2) bars state-tort prejudgment interest |
|---|---|
| Interest rate | One-year Treasury constant-maturity rate immediately before judgment plus 2 points (§§ 535.3, 668.13(3)); a qualifying contract-fixed rate controls under § 668.13(2) |
| When interest starts running | Chapter 668 actions: filing date, except future damages from judgment (§ 668.13(1), (4)). Contract and other non-chapter-668 claims require their own accrual analysis |
| Contract vs. tort claims | § 535.3 borrows the rate; § 668.13 limits its filing-date accrual rule to chapter 668 actions. Wilson holds a contract-based underinsured motorist claim outside that chapter |
| Mandatory or discretionary | Interest on money judgments is directed by “shall” (§ 535.3); chapter 668 prejudgment interest is also directed by “shall” (§ 668.13), subject to its exceptions |
| Simple or compound | § 668.13(5) requires daily computation through payment but does not expressly prescribe simple or compound interest |
| Claims against the government | State tort claims: no prejudgment interest or punitive damages under § 669.4(2); interest runs from judgment under Hook |
| Other exceptions | In chapter 668 actions, future-damage interest starts at judgment; a fixed contract rate is subject to the § 535.2 ceiling; structured judgments may use annuity principles (§ 668.13) |
Requirements one by one
Interest rate
Iowa Code § 535.3(1)(a) directs a rate calculated under § 668.13. Subsection 668.13(3) uses the one-year Treasury constant-maturity rate settled immediately before judgment, plus two percentage points. The Judicial Branch table published a 4.11% benchmark for September 8, 2026, making 6.11% if that is the applicable row. A fixed contract rate is addressed by § 668.13(2), subject to the maximum under § 535.2.
When interest starts running
Section 668.13 limits its rules to actions brought under chapter 668. For those actions, subsection (1) starts interest when the lawsuit begins, while subsection (4) delays interest on future damages until judgment. In Wilson v. Farm Bureau Mutual Insurance Co., the Iowa Supreme Court explained that a contract-based underinsured motorist claim did not trigger chapter 668. Its discussion of common law tied interest to when money became due and payable and noted a different treatment for unliquidated claims. A contract claimant should not assume the chapter 668 filing date applies.
Claims against the government
Iowa Code § 669.4(2) bars interest before judgment and punitive damages on a tort claim against the state. The Iowa Supreme Court applied that bar in Hook v. Trevino and said interest instead runs from judgment.
What trips people up
The rate cross-reference in § 535.3 does not erase § 668.13's opening words, “actions brought pursuant to this chapter.” That limit matters when comparing a contract claim with a comparative-fault tort claim.
Section 668.13(5) requires interest to be computed daily through payment, with a separate rule for structured judgments. It does not expressly say that all prejudgment interest is simple interest or prescribe compounding.
Common questions
Does interest always start when a lawsuit is filed? No. Section 668.13(1) supplies that date for chapter 668 actions; a different claim needs its own accrual basis. Future damages under chapter 668 start at judgment.
Is the Judicial Branch table's 4.11% row the final rate? No. Section 668.13(3) adds two percentage points to the applicable Treasury benchmark. The September 8, 2026 row would produce 6.11% if it applies to the judgment date.
Can a state tort claimant receive interest before judgment? No. Section 669.4(2) forbids prejudgment interest against the state on a tort claim.
Statutes and sources
- Iowa Code § 535.3(1)(a), accessed 2026-10-06: https://www.legis.iowa.gov/docs/code/535.3.pdf
- Iowa Code § 668.13, accessed 2026-10-06: https://www.legis.iowa.gov/docs/code/668.13.pdf
- Iowa Code § 669.4(2), accessed 2026-10-06: https://www.legis.iowa.gov/docs/code/669.4.pdf
- Wilson v. Farm Bureau Mutual Insurance Co., Iowa Supreme Court, July 31, 2009, accessed 2026-10-06: https://www.iowacourts.gov/moduledocuments/embed/1722/070101_305D10B8D0932.pdf
- Hook v. Trevino, 839 N.W.2d 434, accessed 2026-10-06: https://www.iowacourts.gov/moduledocuments/embed/2746/120283_466CDB58F42E4.pdf
- Iowa Judicial Branch interest table, accessed 2026-10-06: https://www.iowacourts.gov/iowa-courts/district-court/post-judgment-interest-table
Source links
Every statute quoted above, linked, with the date we checked it.
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