Bad Faith Insurance Law in Washington: Policyholders/Beneficiaries Can Sue Insurance Companies, Not Individual Employees
August 11, 2021 – Matt Albrecht
When you make an insurance claim, the policy should pay out the full amount due without any unreasonable or unwarranted delay. The Washington Consumer Protection Act (CPA) protects people and families against bad faith settlement practices. If your claim is delayed, underpaid, or denied in bad faith, you can sue to hold the responsible parties accountable.
In the 2019 case of Keodalah v. Allstate Insurance Company, the Washington Supreme Court ruled that policyholders/beneficiaries can sue their insurer for bad faith damages, but not an individual insurance adjuster. In this article, our Spokane insurance attorney provides an overview of the state’s highest court decision in the case of Keodalah v. Allstate Insurance Company.
Case Review: Keodalah v. Allstate Insurance Company
Backgrounds & Facts
In 2007, Mr. Keodalah was involved in a truck accident in Seattle. The other party in the crash was an uninsured motorist. An investigation revealed that the other driver’s failure to stop at a stop sign was the primary cause of the accident. Notably, Mr. Keodalah has uninsured motorist coverage. The uninsured motorist policy was through the Allstate Insurance Company.
After the accident, Mr. Keodalah sought a payout for the full policy limit of $25,000. The company countered with $1,600—arguing that Mr. Keodalah was 70 percent at fault for the accident, even though the company had a report from the Seattle Police Department that suggested otherwise. The policyholder sued Allstate and the individual insurance adjuster for bad faith.
Eventually, the claim made it all the way to the Washington Supreme Court. The issue before the state’s highest court was whether or not an employee (insurance adjuster) can be sued individually as part of a bad faith insurance claim under the Washington Consumer Protection Act (CPA). Notably, a Washington appeals court ruled in favor of the policyholder, finding that both an insurance company and an insurance adjuster on an individual basis can be sued for bad faith conduct.
The Court Decision
In a 5 to 4 decision, the Washington Supreme Court ruled that the CPA does not allow policyholders or beneficiaries to sue an insurance adjuster—as an individual—in a bad faith claim. Instead, any such legal claim should be filed against the responsible company. Bad faith claims are complicated. If you have any specific questions about your rights or options, do not hesitate to reach out to an experienced Spokane, WA insurance claim attorney for guidance.
Schedule a Free Consultation With an Insurance Lawyer in Spokane, Washington
At Albrecht Law, PLLC, our Spokane insurance denial lawyer has the professional skills and legal expertise that you can rely on. Insurance companies can be held liable for bad faith practices. To set up a free, fully confidential consultation with an insurance bad faith attorney in Washington, please call our Spokane law office or send us a message directly through our website. Our firm represents policyholders and beneficiaries in Spokane County and throughout Eastern Washington.
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