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Washington Insurance Commissioner Releases New Guidance to Businesses in Light of Recent Events

by | Jun 7, 2020 | Featured, Insurance Law, Misc., News & Updates

On June 3, 2020, Washington Insurance Commissioner Mike Kriedler advised Washington State business owners to contact their insurance providers as soon as possible if they have experienced loss or damage in association with recent occurrences of looting and vandalism taking place throughout the state.  The following is a link to the full announcement:

https://www.insurance.wa.gov/news/kreidler-advises-businesses-damaged-during-protests-file-claims-asap

The announcement included the following statements:
  • Damage to commercial property/business caused by theft, vandalism, and/or fire should be covered under a commercial property policy unless that type of loss is specifically excluded;
  • Coverage for damage to plate glass windows is dependent upon the individual policy language;
  • Business that have been temporarily closed because of the COVID-19 pandemic are not considered vacant under the terms of an insurance policy; and
  • A “war and military action” exclusion should not exclude damage caused during a protest.
 In addition, the Insurance Commissioner advised business owners to take the following immediate steps if they plan on filing a claim: 1) contact their insurance company; and 2) consider hiring professional help with debris clean up and to secure their property to protect against further damage.
This announcement is not surprising given recent events and widespread resulting property damage.However, this advisement and increase in civil disturbance claims raise numerous coverage issues.These include the potential application of coverage exclusions including the vacancy exclusion, mitigation and duty to protect from further loss requirements, and valuation issues.
In addition, the steps necessary for an insured to properly mitigate damages and protect insured property from further loss is also fact dependent and will require a careful examination of the steps taken by an insured.Whether, and to what extent, any such mitigation efforts are covered by a policy will depend on the individual policy.The potential for coverage for any such steps should be discussed with an insured early in the claim handling process.

Finally, in light of the potentially severe impacts of the COVID-19 pandemic on business throughout the state and country, we expect more complicated valuation disputes.The risk of inflated claims may also increase.

Whether property damage by theft, vandalism, or fire is covered will ultimately be dependent upon the terms and conditions of the actual policy and the specific facts presented in any claim.As result, it is important that insurers proactively and thoroughly investigate each claim based on its unique facts.It will also be necessary to thoroughly and timely respond to these claims in order to avoid extracontractual exposures.

These are just a few of the potential coverage issues raised by the Insurance Commissioner’s announcement and the damage caused during by the recent civil disturbance claims.

Lether Law Group has been handling large first-party property losses for over 32 years.This includes earthquake claims, storm and hurricane losses, wildfire claims, and even a number of claims involving civil disturbances.If you would like to discuss these recent developments or any other matters, please feel free to contact us at any time.

New Federal Court Case Tests the Limits of Washington Supreme Court Ruling in Keodalah and Allows Some Claims Against Adjusters to Proceed in State Court.

by | May 20, 2020 | Featured, Insurance Law, News & Updates

As many of you likely recall, the Washington Supreme Court affirmed the trial court’s dismissal of the statutory extra-contractual claims asserted against an employee-adjuster on October 3, 2019 in Keodalah v. Allstate, 194 Wn.2d 339, 449 P.3d 1040 (2019).  However, as we noted in our newsletter discussing the opinion, the Court seemingly left open the possibility that certain extra-contractual claims could be brought against adjusters based on the common law.

In particular, we noted that the majority opinion did not address whether a common law bad faith claim against an adjuster was legally sustainable in Washington. In fact, the dissent expressed a belief that such a claim should be recognized in Washington. Further, all of the Consumer Protection Act (“CPA”) claims addressed in Keodalah were per se claims based on violations of statutes and regulations applicable to insurers. The Keodalah court did not address so-called traditional common law CPA claims based on the Hangman Ridge elements proscribing any deceptive or unfair act or practice that occurs in trade or commerce, affecting the public interest and proximately causing injury to business or property.

A recent federal court decision has once again addressed the dispute over whether adjusters can be held liable under certain extra-contractual claims post-Keodalah. In Leonard v. First Am. Prop. & Cas. Ins. Co., 2020 U.S. Dist. LEXIS 23680 (W.D. Wash. 2020), Judge Ronald B. Leighton was confronted with a Motion to Remand after First American removed the Leonards’ state court action asserting various extra-contractual claims against First American and its adjuster. The Removal was based on the premise that the claims asserted against the non-diverse adjuster were fraudulently joined and precluded by Keodalah.

In granting the Motion to Remand, Judge Leighton expressly recognized that the Keodalah court left open the possibility that a common law bad faith claim against an insurance adjuster could be a viable cause of action in Washington. He also cited to Panag v. Farmers Ins. Co. of Washington, 166 Wn.2d 27, 41-42 (2009), wherein the Court held that no contractual relationship was necessary to prevail on a CPA claim, to support the proposition that a traditional CPA claim against an insurance adjuster could also be viable. While Judge Leighton recognized that these causes of action might eventually be dismissed or precluded, he ultimately ruled that “it is better to leave such novel questions of Washington State law to Washington State courts.”

Based on Judge Leighton’s analysis in Leonard, it appears that the Supreme Court’s decision in Keodolah may have only been a partial step in addressing the viability of direct causes of action against insurance adjusters in Washington. We will likely not know with certainty what, if any, claims may be brought against adjusters in Washington until common law bad faith claims and common law CPA claims against adjusters are tested in Washington appellate courts.

If you have any questions regarding the effect of the cases discussed herein or any other issues involving Washington insurance law, please do not hesitate to contact our offices.