When you buy insurance, your agent acts as if he is your best friend. But when you file a claim, that friendship nowhere to be seen. The insurance company will have you deal with the claims department. You may encounter an outright denial of your claim, long delays in getting payment, or an offer for substantially less than you deserve. When that happens, the insurance company may be acting in bad faith.
Insurance bad faith is just plain wrong. You paid for the policy – so you should e treated fairly. Washington State law provides that you can hold an insurance company — and in some cases, even an insurance adjuster — legally liable for bad faith claims handling if their handling of your insurance claim violates the Insurance Fair Conduct Act, RCW 48.30.015.
Make no mistake about it – this statue is a big deal. If your insurance company has treated you badly, you can use this law to level the playing field.
IFCA is a favorable law for insureds when dealing with an insurance claim and their own insurance company. Washington IFCA law declares that the business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. This means that the insurance company must deal fairly with their insureds, and give equal consideration to the interests of their insured.
The Insurance Fair Conduct Act specifically prohibits bad faith denials or payment in RCW 48.30.015
Any first party claimant to a policy of insurance who is unreasonably denied a claim for coverage or payment of benefits by an insurer may bring an action in the superior court of this state to recover the actual damages sustained, together with the costs of the action, including reasonable attorneys’ fees and litigation costs. (Emphasis added.)
IFCA establishes a cause of action for a person covered by an insurance policy or contract if an insurance company wrongfully denies a claim or inappropriately processes a claim. IFCA defines what types of conduct by an insurance company or adjuster constitute a violation of the law:
(a) WAC 284-30-330, captioned “Specific unfair claims settlement practices defined”;
(b) WAC 284-30-350, captioned “Misrepresentation of policy provisions”;
(c) WAC 284-30-360, captioned “Standards for the insurer to acknowledge pertinent communications”;
(d) WAC 284-30-370, captioned “Standards for prompt investigation of claims”;
(e) WAC 284-30-380, captioned “Settlement standards applicable to all insurers”; or
(f) Under RCW 48.30.010 captioned “Unfair practices in general—Remedies and penalties”
A successful plaintiff can recover “actual damages sustained, together with the costs of the action, including reasonable attorneys’ fees and litigation costs.” Costs include “actual and statutory litigation costs, including expert witness fees.”
In addition, the court has authority to “increase the total award of damages to an amount not to exceed three times the actual damages.” (Emphasis added.)
The Washington Court of Appeals held that the IFCA requirement to act in “good faith” applies not only to the insurance company, but to the adjuster working for the insurance company as well. That means you may be able to file an IFCA claim against either or both the company and the adjuster.
The WAC regulations cited in the IFCA include an extensive list of specific practices that constitute unfair claims settlement practices in WAC 284-30-330. They include:
(1) Misrepresenting pertinent facts or insurance policy provisions.
(2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
(3) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.
(4) Refusing to pay claims without conducting a reasonable investigation.
(5) Failing to affirm or deny coverage of claims within a reasonable time after fully completed proof of loss documentation has been submitted.
(6) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear. …
(7) Compelling a first party claimant to initiate or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings.
(8) Attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.
(12) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
(13) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(16) Failing to adopt and implement reasonable standards for the processing and payment of claims after the obligation to pay has been established.
In addition, WAC 284-30-370 provides the standards for prompt investigation of a claim:
Every insurer must complete its investigation of a claim within thirty days after notification of claim, unless the investigation cannot reasonably be completed within that time.
The regulations include numerous other provisions relating to standards applicable to insurance companies’ handling of claims. Violation of any of those provisions may constitute a violation of IFCA.
An insurance bad faith claim punishes the insurance company who should be but in fact is not helping you. Denial of a claim alone — or an offer for less than full coverage — is probably not enough to constitute bad faith. To prove a bad faith, claim by an insurance company or adjuster it helps if you can show:
In addition to a cause of action for insurance bad faith under the IFCA, there are situations in which you may have a claim under the Washington Consumer Protection Act for unfair and deceptive practices or a common law breach of contract claim. Your attorney can explain whether these options may also be available.
It’s bad enough that you have an accident and need to pursue an insurance claim. Then if the insurance company adds insult to injury by violating your rights, file an IFCA claim. Contact us: we’ll talk.