On Tuesday, May 15, 2007, Washington State Governor Christine Gregoire signed into law the Insurance Fair Conduct Act. This bill finally gives real penalties for insurance companies who unreasonably deny a claim or fail to pay benefits to their insureds.
The attorneys at Bernard & Lindquist have fought for passage of this bill. It has become standard practice in the insurance industry to “shave” off claim payments. For example, in the case of an at-fault driver who runs a red light and broadsides another vehicle, we commonly see an insurance adjuster arbitrarily assigning some percentage of fault on their own insured driver who had a green light. By doing this, the insurance company does not have to pay 100% of their insured’s vehicle damage or medical bills. These are benefits paid for by the insured in his monthly premiums. The amount “shaved” by the insurance company may total only a few hundred dollars per claim, but it saves the insurance industry executives millions.
Prior to passage of this law, an insured driver had no recourse but to accept the insurance adjuster’s low offer because if he filed a lawsuit he could only receive the amount the insurance company should have paid in the first place.
Without some risk of having to pay more than the claimed amount, there is no deterrent to the insurance company for unreasonably denying a claim. The Insurance Fair Conduct Act corrects this inequity by allowing for an award of attorneys fees and costs if it is determined that the insurance company acted unreasonably in denying a claim or in paying benefits. It also allows the court to award up to three times the amount of the actual damage if denial was egregious.
Please thank Governor Gregoire and the sponsors of this legislation, Senator Brian Weinstein and Representative Steve Kirby. The consumers of Washington State finally have a means to level the playing field against the insurance industry.
To view the text of the bill click here.