By Whitny L. Norton
The duty of good faith applies to everyone conducting the business of insurance. Individual insurance adjusters are now personally liable for bad faith even when they are acting in the course and scope of employment. Earlier this year, Division I of the Washington State Court of Appeals unequivocally held that individual insurance adjusters may be liable for bad faith and violation of the Consumer Protection Act. Keodalah v. Allstate Insurance Company, et al., Case No. 75731-8-I (Div. 1, March 26, 2018). In that case, an individual insurance adjuster handling an automobile collision claim failed to negotiate a settlement in good faith with its insured. The insured was involved in a collision with an uninsured motorcyclist and made a claim with its insurer under its uninsured motorist coverage. The insurer interviewed several witnesses to the collision, all of whom represented that the motorcyclist was traveling at an excessive speed. In addition, the insurer hired an accident reconstruction firm that determined the insured had obeyed the traffic laws and that the motorcyclist caused the collision. Despite this investigation, the insurer assessed the insured’s fault at 70 percent and offered to resolve the claim at just one-fifth of policy limits. The Court of Appeals found the insurance adjuster, who the insurer designated as its Civil Rule 30(b)(6) representative, personally liable reasoning that the duty of good faith imposed on the business of insurance applies to “all persons” involved in insurance, including the insurer and its representatives.
Washington law strongly favors insureds and it is important for individual consumers, businesses, and insurance carriers to consider the implications of Washington’s strong public policy in favor of insured.