Below is a sampling of important regulations in Washington State law relating to dealings between you and your insurance company. For more information on Washington state policy on these matters, visit the Office of the Insurance Commissioner’s website at http://insurance.wa.gov.
WAC 284.30.330 – Specific unfair claims settlement practices defined.
The following are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance, specifically applicable to the settlement of claims:
(1) Misrepresenting pertinent facts or insurance policy provisions.
(2) Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.
(3) Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.
(4) Refusing to pay claims without conducting a reasonable investigation.
(5) Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed.
(6) Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear. In particular, this includes an obligation to effectuate prompt payment of property damage claims to innocent third parties in clear liability situations. If two or more insurers are involved, they should arrange to make such payment, leaving to themselves the burden of apportioning it.
(7) Compelling insureds to institute or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings.
(8) Attempting to settle a claim for less than the amount to which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application.
(9) Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made.
(10) Asserting to insureds or claimants a policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration.
(11) Delaying the investigation or payment of claims by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring subsequent submissions which contain substantially the same information.
(12) Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.
(13) Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.
(14) Unfairly discriminating against claimants because they are represented by a public adjuster.
(15) Failure to expeditiously honor drafts given in settlement of claims. A failure to honor a draft within three working days of notice of receipt by the payor bank will constitute a violation of this provision. Dishonor of any such draft for valid reasons related to the settlement of the claim will not constitute a violation of this provision.
(16) Failure to adopt and implement reasonable standards for the processing and payment of claims once the obligation to pay has been established. Except as to those instances where the time for payment is governed by statute or rule or is set forth in an applicable contract, procedures which are not designed to deliver a check or draft to the payee in payment of a settled claim within fifteen business days after receipt by the insurer or its attorney of properly executed releases or other settlement documents are not acceptable. Where the insurer is obligated to furnish an appropriate release or settlement document to an insured or claimant, it shall do so within twenty working days after a settlement has been reached.
(17) Delaying appraisals or adding to their cost under insurance policy appraisal provisions through the use of appraisers from outside of the loss area. The use of appraisers from outside the loss area is appropriate only where the unique nature of the loss or a lack of competent local appraisers make the use of out-of-area appraisers necessary.
(18) Failing to make a good faith effort to settle a claim before exercising a contract right to an appraisal.
(19) Negotiating or settling a claim directly with any claimant known to be represented by an attorney without the attorney’s knowledge and consent. This does not prohibit routine inquiries to an insured claimant to identify the claimant or to obtain details concerning the claim.
WAC 284.30.390 – Acts or practices considered unfair in the settlement of motor vehicle claims.
In addition to the unfair claims settlement practices specified in this regulation, the following acts or practices of the insurer are hereby defined as unfair methods of competition and unfair or deceptive acts or practices in the business of insurance, specifically applicable to the settlement of motor vehicle claims:
(1) Failing to make a good faith effort to communicate with the repair facility chosen by the claimant.
(2) Arbitrarily denying a claimant’s estimate for repairs.
(a) A denial of the claimant’s estimate for repairs to be completed at the chosen repair facility based solely on the repair facility’s hourly rate is considered arbitrary if the rate does not result in a higher overall cost of repairs.
(b) If the insurer pays less than the amount of the estimate from the claimant’s chosen repair facility, the insurer must fully disclose the reason or reasons it paid less than the claimant’s estimate, and must thoroughly document the circumstances in its claim file.
(3) Requiring the claimant to travel unreasonably to:
(a) Obtain a repair estimate;
(b) Have the loss vehicle repaired at a specific repair facility; or
(c) Obtain a temporary rental or loaner vehicle.
(4) Failing to prepare or accept an estimate provided by the claimant that will restore the loss vehicle to its condition prior to the loss.
(a) If the insurer prepares the estimate, it must provide a copy of the estimate to the claimant.
(b) If a claimant provides the estimate and the insurer, after evaluation of the claimant’s estimate, determines it owes an amount that differs from the estimate the claimant provided, the insurer must fully disclose the reason or reasons for the difference to the claimant, and must thoroughly document the circumstances in the claim file.
(c) If the claimant chooses to take the loss vehicle to a repair facility where the overall cost to restore the loss vehicle to its condition prior to the loss exceeds the insurer’s estimate, the claimant must be advised that he or she may be responsible for any additional amount above the insurer’s estimate.
(5) If requested by the claimant and if the insurer prepares the estimate, failing to provide a list of repair facilities within a reasonable distance of the claimant’s principally garaged area that will complete the vehicle repairs for the estimated cost of the insurer prepared estimate.
(6) Failing to consider any additional loss related damage the repair facility discovers during the repairs to the loss vehicle.
(7) Failing to limit deductions for betterment and depreciation to parts normally subject to repair and replacement during the useful life of the loss vehicle. Deductions for betterment and depreciation are limited to the lesser of:
(a) An increase in the actual cash value of the loss vehicle caused by the replacement of the part; or
(b) An amount equal to the value of the expired life of the part to be repaired or replaced when compared to the normal useful life of that part.
(8) If provided for by the terms of the applicable insurance policy, and if the insurer elects to exercise its right to repair the loss vehicle at a specific repair facility, failing to prepare or accept an estimate that will restore the loss vehicle to its condition prior to the loss at no additional cost to the first party claimant other than as stated in the applicable policy of insurance.
(9) If liability and damages are reasonably clear, recommending that claimants make a claim under their own collision coverage solely to avoid paying claims under the liability insurance policy.
[Statutory Authority: RCW 48.02.060 and 48.30.010. 09-11-129 (Matter No. R 2008-07), § 284-30-390, filed 5/20/09, effective 8/21/09; 03-14-092 (Matter No. R 2002-06), § 284-30-390, filed 6/30/03, effective 10/1/03. Statutory Authority: RCW 48.02.060, 48.44.050 and 48.46.200. 87-09-071 (Order R 87-5), § 284-30-390, filed 4/21/87. Statutory Authority: RCW 48.02.060 (3)(a). 85-02-019 (Order R 84-8), § 284-30-390, filed 12/27/84. Statutory Authority: RCW 48.02.060 and 48.30.010. 78-08-082 (Order R 78-3), § 284-30-390, filed 7/27/78, effective 9/1/78.]
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