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Burien Personal Injury Attorney W. Tracy Codd: ‘Insurance adjusters may be liable’


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From Advertiser Attorney W. Tracy Codd:

Insurance agent working on car accident claim process

Washington Supreme Court to Decide: Insurance Claims Adjusters May Be Personally Liable for Bad Faith as Well as Violations of Washington’s Consumer Protection Act

The Washington State Court of Appeals Division One has ruled that individual insurance adjusters may be personally liable for violations of Washington’s insurance bad faith statute, RCW 48.01.030. The court also ruled that insurance claims adjusters may be personally liable for violations of Washington’s Consumer Protection Act, RCW 19.86.020. Later this year, the Washington State Supreme Court will issue its opinion on the matter.

RCW 48.01.030 reads as follows:

The business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance.

Keodalah v. Allstate Ins. Company, 413 P.3d 1059 (Wash. App. 2018) is the latest case affirming the broad application of Washington’s insurance bad faith statute. In addition, as noted by the court in Keodalah, the bad faith statute applies not only to insurers, but to insureds (and their representatives).

These rulings affirm the Washington legislature’s desire to protect policyholders from unreasonable and dishonest insurers and their representatives.

Specifically, the Court of Appeals held that the obligation to act in “good faith” applies to the claims adjuster working for an insurer, not just the insurer that employed the claims adjuster. This rule not only permits insureds to go directly after the person at the insurance company responsible for denying a claim in bad faith, but it may also allow insureds to keep state law claims filed in state court rather than in federal court.

In Keodalah, Moun Keodalah had stopped at a stop sign and then started to drive through an intersection when his truck was struck by a motorcycle, killing the motorcycle driver and injuring Mr. Keodalah. The police department as well as two other investigators determined that the motorcycle had been greatly exceeding the posted speed limit of 30 miles per hour. Findings supported speeds from 60 miles per hour to as high as 74 miles per hour.

Despite substantial evidence pointing to the motorcyclist’s fault, Allstate responded to Keodalah’s claim under his underinsured-motorist coverage with its determination that Keodalah was somehow 70% at fault.

Disregarding the police report and the conclusions of Allstate’s own investigators, the claims adjuster asserted that Keodalah had run the stop sign and had been talking on his cell phone (the latter conclusion was contradicted by Mr. Keodalah’s phone records).

Keodalah won his coverage lawsuit, including a jury determination that the motorcyclist was 100% at fault, and he then filed a second lawsuit asserting bad-faith and Consumer Protection Act claims against both Allstate and the assigned insurance claims adjuster.

In the second lawsuit, the trial judge ruled in favor of the claims adjuster in dismissing the bad-faith and CPA claims against her, but this was not to last long. On appeal, the Keodalah court held that Washington’s statute requiring “good faith” in the business of insurance applies to insurers and those acting on behalf of insurers (insurance claims adjusters).

This Keodalah case has large implications in the insurance industry. The holding exposes insurance claims adjusters to significant legal repercussions for their improper behavior in investigating and adjusting insurance claims. The case makes clear that insurance claims adjusters may not hide behind a veil of employment, but instead they may now face the same type of liability as the employer itself.

How has the insurance industry responded? AllState Insurance Company has appealed the case to the Washington State Supreme Court. On February 26, 2019, the Washington Supreme Court heard oral arguments in the case and a ruling is expected later in the year.

The insurance industry has also responded with internal chatter as to how it can improve its practices.

One industry advisor found as follows:

What can be done to prevent individual claim representative liability? Begin with a thorough and complete collection, review, and documentation of all information relevant to the claim. Institute a double-check policy and audit claims files involving first-party claims. Conduct periodic training on new statutes and case laws. Immediately flag anything regarding allegations of bad faith. Ensure that a complete evaluation analysis is based on documents and information, not opinions or assumptions, and don’t be afraid to update and review the evaluation based on new or more complete information. Additionally, ensure timely follow up and transparency with policyholders by updating them on the claim’s status. Adhere strictly to claim manuals and policies, and verify the amounts offered are consistent with liability and damage information.

Conducting roundtables with your team can prevent claims professionals from missing the significance of relevant information. Companies should also consider errors and omissions insurance, as such policies are designed to cover financial losses resulting from liability for committing mistakes in the performance of professional duties, which would include those by claims professionals.

For the entire article, please see http://clmmag.theclm.org/home/article/Keodalah-Allstate-exposes-claims-representatives-liability.

From my perspective, regardless of how the Washington State Supreme Court rules, Keodalah will lead to heightened scrutiny of insurance claims adjuster actions and hopefully improvements in its practices as discussed above. A win for the insurance industry as well as a win for persons injured in auto accidents and other insurance claimants who make well-founded claims against their insurance companies.

Further, it is also my opinion that the substantial majority of insurance adjusters are ethical and hard working. This is especially true in the UIM/UM first party context, where the statutory duties for adjusters are well-defined.

We certainly disagree with the conclusions of insurance claims adjusters in many cases, however their rationales and perspectives are often quite different than a Plaintiff’s. Fortunately, the courts are the final arbiter of these disagreements.

If you believe that an insurance adjuster acted in bad faith or violated the CPA in responding to your insurance claim, please feel free to contact us to help you determine the best way to proceed.

W. Tracy Codd has been representing persons involved in serious auto accidents since 1987. Call for a free consultation.

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Phone: 206-248-6152

Email: [email protected]

Web: www.TracyCodd.com

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