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Understanding Washington Insurance Bad Faith Law

More Information on Bad Faith:

 

What is Insurance Bad Faith Law in Washington State?

Washington law recognizes that if the only consequence of wrongful behavior by an insurance company is that the insurance company would be required to pay the amount that it legitimately owes, insurance companies would have a strong incentive to deny most claims.  Insurance bad faith provides a strong incentive to insurance companies that if they choose to conduct egregious and wrongful actions, they may face large financial penalties for failing to do so.

In Washington, insurance carriers have a duty to give the same consideration to the interests of their policyholders as they do to their own interest.  This means that insurance companies cannot simply deny a claim for spurious reasons.

Instead, they must give prompt attention to all claims, and to make payment in a reasonably prompt manner for valid claims. They must carefully investigate each claim and provide a specific reason if a claim is to be denied.

When insurance companies fail in these respects and instead act in a particularly egregious manner in how the treat policyholders and how they deny claims, a case for insurance bad faith may exist.  As an example, if insurance claim adjusters are taught to automatically deny claims or to postpone claims evaluation, this may be an example of bad faith.

See “What is the Difference Between Ordinary Claim Denial and Insurance Bad Faith?

It’s important to understand that a claim for insurance bad faith constitutes a cause of action that is separate from the amount that the insurance company legitimately owes with respect to a particular claim.  Amounts owed in respect of a particular claim will generally be fixed, and will be dependent upon a specific cost aspect, such as the fair market value of a car at the time of an accident.  While there may be a good faith difference of opinion between an insurance company and the insured regarding the value of a car that has been totaled, typically such difference will be within a reasonable amount.

A Claim of Insurance Bad Faith is Different

Insurance bad faith is designed to punish an insurance company for wrongful or egregious action or conduct.  Because bad faith is designed to punish an insurance company, it will be up to a jury to determine the compensation that should be paid based upon the particular wrongful action of the insurance company.

To Learn More About Whether Your Case May Have a Case For Insurance Faith, Please Call Us Today

We normally represent clients in insurance bad faith cases on a contingency fee basis.  This means that you will not owe us for any fees unless and until we recover an award or settlement for you.  We offer a free, no obligation consultation so that we can learn about your case, and so that you can have the opportunity to ask us any questions that you might have about your case.