What is Bad Faith Insurance?

When you buy insurance, you do it for the protection and security of yourself, your family, and your property.  An insurance contract is the insurance company’s promise to you to follow through on this guarantee of protection and security.  Unfortunately, insurance companies do not always keep their promises.

Insurance companies have a duty under law to act in good faith and to deal fairly with you.  This is called an “implied covenant of good faith,” and it is part of every insurance contract, even if not contained in the written policy.  If an insurance company offers an amount that is unreasonably low, or if an insurance company wrongfully denies a claim, the company is acting in bad faith and is breaking the law. 

Examples of bad faith include:

  • Denying a claim without a reasonable basis
  • Failing to conduct a reasonable investigation
  • Misrepresenting your rights under the policy
  • Unreasonably delaying in making payments
  • Failing to defend you against a claim or failing to settle a claim against you

Our bad faith insurance and insurance law practice includes the following areas:

  • Insurance Fair Conduct Act (IFCA)
  • First Party Bad Faith
  • Third Party Bad Faith
  • Improper Personal Injury Protection (PIP) Claim Handling
  • Improper Uninsured Motorist (UM/UIM) Claim Handling
  • Examinations Under Oath
  • Homeowners Policies

If you have had any of these things happen to you, you need to talk to an experienced insurance lawyer.

Insurance Fair Conduct Act (IFCA)

 In 2007 the Washington legislature passed the Insurance Fair Conduct Act, also known as IFCA.  This gives people in Washington who have insurance policies significant protections from unreasonable and unscrupulous conduct by insurance companies.  There are significant penalties for insurers if they violate these rules.

Fundamentally, IFCA prohibits insurance companies from unreasonably denying a claim or unreasonably paying benefits which are due under a policy of insurance.  This can occur in many different ways:

  • Unreasonably denying PIP benefits
  • Failing to conduct a reasonable investigation of the claim
  • Misrepresenting policy terms
  • Failing to acknowledge communications in a reasonable time
  • Failing to adequately defend a claim made against you, resulting in financial hardship

At GLP Attorneys, we have deep experience in working with insurance companies in settlement of claims by injured people.  This experience has formed the basis of our ability to successfully bring claims against insurance companies under IFCA.

If you believe that you have been treated unfairly or unreasonably by an insurance company, please call one of our bad faith insurance attorneys at GLP Attorneys to discuss whether we will be able to help you.

 

First Party Bad Faith Claims

Every insurance company in Washington has a duty of fair dealing and good faith to its customers.  As a policy beneficiary, you are in a “first party” relationship with the insurance company, and the insurance company owes you this duty.  Also, you do not have to be someone who is listed on the policy to have a first-party claim—if you are injured as a passenger in a motor vehicle collision, and you submit a claim under the PIP policy, you are submitting a first-party claim even though it is not your policy.

In the first-party context, the insurance company has many responsibilities and obligations when a claim is submitted:

  • When a claim is submitted, the insurance company has a duty to respond and acknowledge the demand in a timely fashion
  • The company has a duty to conduct a thorough and reasonable investigation of the claim
  • The company has a duty to evaluate the claim, and
  • The company has a duty to negotiate in good faith to resolve the claim

Importantly, the company cannot put its interested above your interests—remember, you are the customer!

 

Third Party Bad Faith

When you have been in a car accident, if it was your fault you probably were glad if you had insurance.  The feeling of peace of mind, that you won’t be placed in financial jeopardy because of the accident is why you purchased the policy, right? 

Your insurance company has a duty to protect and defend you against any claims made relating to the accident.  Part of this duty is to investigate the claims presented and make their best effort to resolve the claim within the policy limit.  This protects you and avoids a lawsuit being filed against you.

Unfortunately, sometimes an insurance company will want to “roll the dice” at trial, and refuse to pay or resolve legitimate claims, even though they have the ability to do so.  This could place you in jeopardy and subject to a verdict in excess of your policy limits—if this happens, you could be personally responsible for the excess amount.

If you believe you have been treated unfairly by your insurance company, and that the company has not fully protected your rights, you should call an insurance bad faith lawyer at GLP Attorneys.

Improper Personal Injury Protection (PIP) Claim Handling

When you bought your Personal Injury Protection policy, you probably thought you were being smart, and would have certainty that your medical bills would be paid if you were ever in a motor vehicle collision. After you were injured, you went to the doctor, gave the doctor your PIP information, and went home relieved that your bills would be paid.

Unfortunately, many insurance companies have taken an extremely aggressive approach to Personal Injury Protection claims. You should ALWAYS remember that an insurance company has to act in good faith towards you at all stages of your claim. The Washington Insurance Fair Conduct Act prohibits an insurance company from unreasonable denial of a claim under your PIP policy. Unless your insurance company has done a thorough investigation of your PIP claim, and requested a PIP termination examination, it is likely that your claim has been unreasonably denied, and you should talk with onf of the bad faith attorneys at GLP Attorneys.

Personal Injury Protections claim denials can be very difficult to fight. The insurance company may just deny the claim for no good reason, or it may hire a doctor that lives in Indiana to review your Washington medical records. Often the insurance company adjusters who work on the claim do not even live in Washington, and are unfamiliar with Washington insurance requirements. All insurance claims which occur or are adjusted in Washington must incorporate all of insurance regulation statutes and administrative code provisions. Touchette v. Northwestern Mutual Insurance Co. 80 Wn.2s 327 (1972. Failure to do this, or to affirmatively tell you something inconsistent with Washington law could be a “misrepresentation of policy provisions” and thus a violation of the Insurance Fair Conduct Act.

The attorneys at GLP Attorneys have deep experience and have had much success in fighting wrongful PIP claim denials. If your PIP claim has been denied, please call one of our bad faith insurance attorneys to discuss your claim.

Improper Uninsured Motorist (UM/UIM) Claim Handling

If you are injured in a motor vehicle collision, and the person who caused the collision does not have enough insurance (or any insurance!) to make you whole, you have a valid claim under the Underinsured/Uninsured portion of your policy.

A UM/UIM claim is a hybrid claim against your insurance company. There are parts of the claim which give the insurance company the right to be adversarial (i.e., to fight with you), and there are parts of the claim which requires the insurance company to treat you with respect and in good faith.

Since this is what is called a “first party” claim, you have many important rights and protections in Washington State. The Washington Insurance Fair Conduct Act prohibits an insurance company from unreasonable denial of a claim under your UIM policy. Unless your insurance company has done a thorough investigation of your UIM claim (often this has not been done), it is likely that your claim has been unreasonably denied, and you should talk with one our bad faith attorneys.

The attorneys at GLP Attorneys have had many successes in fighting wrongful UIM claim denials. If your UIM claim has been denied, please call one of our bad faith insurance attorneys to discuss your claim.

Examinations Under Oath

If you have filed a claim against your insurance policy, either under your UIM (Underinsured or Uninsured Motorist), PIP (Personal Injury Protection), or Home Owner’s policy, you may be asked to give a recorded statement to the insurance adjuster. This is called an “Examination Under Oath.”
Your insurance policy allows the adjuster to use this in order to assist in the insurance company’s investigation of the claim. However, this right is not unlimited! The insurance company can only ask for an Examination Under Oath when the request is reasonable, and when the reason for the request involves a material question of fact. Staples v. Allstate Ins. Co., 176 Wn.2d 404 (2013). One of the factors considered when judging the reasonableness request is whether the insurance company can obtain the information from other sources, like governmental investigation reports (police reports, fire investigation reports, etc.).
Often, the insurance company will request a EUO when it suspects the policy holder of committing fraud. The consequences of an Examination Under Oath can be significant—if the company believes there has been fraud, it can deny the claim entirely! It is also possible that you may be “black listed” by the insurance company, and this could affect your ability to purchase insurance from them in the future.
Insurance companies must always act in good faith towards their clients. They must be “actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters.” RCW § 48.01.030. If the insurance company asks for an Examination Under Oath for an improper purpose, it may be acting in bad faith.
If you have been asked to give an Examination Under Oath, you have a right to be accompanied by an attorney. Often, an attorney can work with the insurance company and avoid the need for an Examination Under Oath entirely. GLP Attorneys has experience in helping its clients navigate these tricky situations. Before responding to the insurance company’s request for an Examination Under Oath, you should consult with a Seattle Bad Faith Attorney at GLP Attorneys.

Homeowners Policies

You may not have looked at your home owner’s policy until you had to file a claim, but these policies cover many situations, including the protecting the home itself, its contents, loss of its use (including additional living expenses), and loss of personal possessions of the homeowner. Policies can also cover liability for accidents that may happen in the home or at the hands of the homeowner within the policy territory.  

Homeowner’s insurance litigation and claims usually start when the insurance company does not deal with its customer in good faith.  When an insurance company does not treat its customer fairly and honestly when the customer makes a legitimate claim for benefits under their homeowner’s policy, this can give rise to a claim against the insurer for bad faith.  One of the most common is when an insurance company makes an unreasonably low offer for a property damage or property loss claim.

If you have a claim which the insurance company is refusing to make a fair offer or unfairly denying the claim, you should speak with a Washington insurance bad faith lawyer at GLP Attorneys.  It is important to have a knowledgeable advocate in your corner to help you protect your rights.