A reasonable denial of coverage.  Based on the weight of legal authority, insurers might wonder if such a thing even exists in Washington.  A new decision from the Western District of Washington demonstrates that insurers will not always find themselves in peril after a denial.  In Trofimovich v. Progressive Direct Insurance Company, 2017 U.S. Dist. LEXIS 125328 (W.D. Wa.), Honorable John Coughenour ruled that Progressive’s denial of an auto physical damage claim based on an exclusion for operation of the vehicle for hire was reasonable.  The Court dismissed all contractual and extra-contractual causes of action based on that finding.

Trofimovich involved an accident occurring on June 17, 2016.  After the accident, the insured contacted Progressive and gave a recorded statement.  During that statement, the insured stated that he was working for Lyft, a ride share company, and that he had a passenger at the time of the accident.  The insured further declined Progressive’s offer to arrange towing services based on his belief that Lyft would provide a tow.

The next day, the insured gave a second statement.  In this statement, the insured indicated that the passenger in his vehicle at the time of the loss was not a paying customer.  He claimed that he had given that passenger a ride earlier in the day, but that the ride at issue was being given for free due to a financial hardship on the part of the passenger.

On June 30, 2016, Progressive issued a letter denying coverage based on an exclusion that precluded coverage for damage occurring while operating the vehicle to transport passengers for a fee.

In July, the insured retained counsel, who issued an Insurance Fair Conduct Act Notice alleging that the denial was in violation of the statute.  On July 29, 2016, without amending its coverage position, Progressive agreed to pay the claim.  On August 26, 2016, the insured filed suit alleging breach of contract, bad faith, and violations of IFCA and the Washington Consumer Protection Act.

On Cross-Motions for Summary Judgment on all causes of action, the Court ruled that Progressive’s interpretation of the insured’s initial statement was reasonable.  The Court further held as follows:
Progressive made the choice to reject one of two apparently conflicting statements, something that cannot be uncommon in claims adjusting. This alone does not render Progressive’s denial unreasonable. . .
Thus, the Court concludes as a matter of law that Progressive’s initial denial of coverage was reasonable.

2017 U.S. Dist. LEXIS 125328 at 7-8.

Based on this finding, the Court proceeded to grant Summary Judgment in favor of Progressive dismissing the insured’s causes of action for breach of contract, bad faith, violation of the Consumer Protection Act, and violation of the Washington Insurance Fair Conduct Act.

The Court’s decision in Trofimovich demonstrates that insurers can secure good results in Washington when they play by the rules and act reasonably, basing their decisions on sound reasoning and a straight-forward assessment of the facts.

Lether & Associates proudly represented Progressive in the Trofimovichcase.  A copy of the decision is attached.  If you would like to discuss the case, or any other matter, in further detail, please feel free to contact us at any time.