Washington Court Rules Duty of Good Faith Extends to All Persons Involved in Insurance
A motorist who was injured in an accident with an at-fault motorcyclist sued the automobile insurer’s adjuster who handled the claim alleging bad faith and violation of the state Consumer Protection Act (CPA). Despite both police and investigator’s conclusions that the motorcyclist was a fault, Allstate refused to pay the $25,000 limits of its UIM policy claiming the motorist was 70% at fault. The claims adjuster offered contradictory testimony on liability. A jury found the motorcyclist 100% at fault. Considering a split of authority, the Washington appeals court held the duty of good faith imposed on “all persons” involved in insurance applies equally to individuals and corporations acting as insurance adjusters. It also refused to follow its own precedent in deciding individual insurance adjusters can be liable for a violation of the CPA. The key takeaway for all carriers in Washington is that an insurer’s employees and perhaps third party administrators may now be named and found to be culpable in bad faith and consumer protection lawsuits.