As we can see with the recent summer 2015 high profile U.S. Supreme Court decisions, the outcomes of the judiciary and legislature can have profound and tangible effects on the daily lives of citizens. And no, I am not trying to be too melodramatic here!
Here in Washington state, one of many examples of where legislation and the judicial process can truly effect people is with insurance claims.
Back in 2007, the Washington State Legislature passed the Insurance Fair Conduct Act (IFCA). The Washington State Governor signed IFCA that year. The insurance industry did not approve of IFCA, and it was able to finance a challenge to IFCA by getting enough signatures to put IFCA on the ballot as a referendum in the fall of 2007. It was a very expensive referendum campaign. The voters in Washington State in 2007 rejected the referendum, and only 43% of Washington voters supported it.
The text of the Washington IFCA law is in RCW 48.30.10 and the additional provisions of this subject RCW chapter. (For purposes of this blog, I am obviously not going to address all of the legalities and case law associated of IFCA, as this piece is more of an introduction to the law with some practical insights.)
Under IFCA, insurance companies have an obligation to act reasonably when investigating and adjusting insurance claims. IFCA applies to claims that an insured/policyholder may have against their own insurance company.
Although state and federal courts continue to sort out the legalities of the IFCA statute, my thinking is that IFCA should also apply in situations where one can qualify as an “insured” under somebody else's insurance company. For example, IFCA should likely apply if one is a passenger in another person's vehicle or injured as a pedestrian or bicyclist; technically, these folks can fall under the definition of being insureds in various situations.
IFCA does not apply to a claim that one may have against another insurance company or an insured from another insurance company, these claims are often known as “third party claims,” and IFCA applies to “first party claims” only. So if you have an auto accident claim against an at-fault driver who negligently collided into your car, IFCA will not apply to this third party claim you have against the at-fault driver. But keep in mind that in many auto accident situations, one may have an IFCA claim against their own insurance company and a separate third party claim against, say, a Pemco or Allstate insured. I know how frustrating it can be for people to get in a wreck and have to deal with not just one––but two or more heavy handed insurance companies. Believe me, it happens!
IFCA does not apply to health insurance carriers, which are governed by other legislation.
To prevail in an IFCA case, the plaintiff must prove that he or she is a first party claimant, that the insurer unreasonably denied a claim for coverage of payment of benefits, and that the plaintiff sustained actual damages. The insured must also send a 20 Day Notice letter to the insurance company and the Washington State Insurance Commissioner before going further forward with an IFCA claim.
While no result in a case is ever certain, if a claimant prevails in an IFCA lawsuit, the insurance carrier can be on the hook for the actual damages sustained, attorney fees and litigation costs, as well as punitive (also known as treble) damages up to three times the amount of the insured's damages.
Real life examples of where IFCA can potentially apply is when your Personal Injury Protection (PIP) carrier refuses to pay certain bills on your behalf to a health care provider or when your own insurance carrier refuses to act reasonably in adjusting your uninsured or underinsured motorist claim (UM/UIM). IFCA can apply in other situations such as auto property damage claims and homeowners' claims. So if your own insurance company is not acting reasonably and delaying payments to you after an auto accident or house fire, you probably want to put IFCA into your vocabulary and consider talking to an attorney.
I, and many attorneys, find that IFCA provides more incentives for insurance companies to act reasonably. Before IFCA, a policy holder could still pursue such claims as a common law bad faith or breach of contact claim, but these claims do not have the more broad remedies that the IFCA statute has for policyholders. However, many insurance companies can still be cavalier about paying out benefits on behalf of a policyholder.
News broke recently that a class action case is currently pending against USAA Insurance. If you are a USAA policy holder, my suggestion is that you consult with an attorney as to whether you should participate in the class action or opt out and pursue your own independent IFCA claim.
Recently, I had an adjuster tell me that I bring up IFCA to him more than any other attorney. I told him that I take that as a compliment! It is important that policyholders in Washington and other states be aware of their rights and remedies when dealing with their own insurance company that they have invested in to trust and take care of them when the need arises.