Washington has enacted new legislation governing actions against insurers in the first-party context. One common form of first-party insurance is standard property insurance coverage. The new law, known as the Insurance Fair Conduct Act, has several key features:
- The IFCA codifies the rule long accepted in Washington that an insurer may not unreasonably deny a first-party insurance claim.
- The IFCA also codifies the long-standing rule in Washington that, where the claim is unreasonably denied, the insured may sue to recover actual damages, including attorney fees and costs. In other words, the damages in such a lawsuit against the insurer are not limited to the policy limits.
- The IFCA grants courts new authority to award damages up to three times the amount of actual damages under certain circumstances, including (but not limited to) the following:
- Unreasonably denying a first-party claim;
- Misrepresenting pertinent facts or policy provisions;
- Failing to respond promptly to communications regarding claims;
- Refusing to pay claims without conducting a reasonable investigation;
- Failing to provide a coverage determination within a reasonable amount of time after proper proofs of loss are submitted;
- Compelling the insured to submit to litigation to obtain the benefits of its policy;
- Attempting to settle a claim for an unreasonably low amount;
Additionally, the statute states that it does not limit other claims or remedies otherwise available.
The statute also require pre-suit notice to the insurer at least twenty days prior to filing an action based on the IFCA. These notice provisions generally reflect the process in other notice statutes, such as the notice requirements applicable to construction defect claims in Washington. Under this statute, the notice must be sent to the insurer as well as the insurance commissioner.(1) The insurer then has twenty days to resolve the problem.
The full text of the IFCA is available here: http://www.leg.wa.gov/pub/billinfo/2007-08/Pdf/Bills/Session%20Law%202007/5726-S.SL.pdf
(1) Refer to statute for specific notice requirements, including method of delivery.
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