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By: Joyce Mocek
Recently a Washington Court of Appeals held that an insurance adjuster, employed by an insurance company, could be held personally liable for bad faith and violation of the Washington Consumer Protection Act (CPA) in the context of adjustment of a claim. (Keodalah et al. v. Allstate Ins. Co., et al., No. 75731-8-I (Wash. Ct. App. Mar. 26, 2018).
In this case, an insured sought uninsured/underinsured motorist benefits under its auto policy with Allstate. Allstate’s claim adjuster determined that the insured was 70% at fault. The insured argued the accident was due 100% to the uninsured motorist, not him. However, Allstate refused to change its position that its insured was 70% responsible for the accident-offering the insured only $5,000. At the trial a jury determined the insured was not responsible for the accident, and awarded the insured $108,868.
The insured then filed a second lawsuit against the insurance adjuster and its insurer for bad faith, claims under the Insurance Fair Conduct Act and the CPA. The trial court granted the defendants’ motion to dismiss, and the insured appealed. The appellate court held that the adjuster was engaged in the business of insurance and acting as an Allstate representative had a duty to act in good faith, and could be sued for bad faith individually. On the CPA issue, the Court rejected prior decisions that had held there must be a contractual relationship to be liable under the CPA. Thus, the Court determined the insured could sue the adjuster individually for bad faith and CPA violations.
This decision may have far reaching implications as it opens the door for insureds to sue the insurance adjuster handling their claim, and/or any claims personnel, including supervisors, experts, or consultants. Claims personnel may also be joined to defeat diversity. There is also the potential for conflict between the claims professionals and their employer that may further complicate issues. This case emphasizes the need to act in good faith, and engage in careful consideration of all issues involved in the claims process, and consider seeking legal counsel if any potential issues arise.
If you have any questions or would like more information please contact Joyce Mocek at [email protected].