In a case decided on February 21, the Washington Supreme Court declared that insurance companies must investigate, process and resolve insurance claims openly with the insured, even if that means forfeiting the insurer’s attorney-client privilege.
An insurance company faces a conflict of interest whenever it gets a claim. On the one hand, the policy promises that the insurer will investigate the claim, decide whether there is coverage, and pay whatever benefits are owing under the terms of the policy. But at the same time the insurer’s financial interests weigh toward denying coverage whenever possible, and paying out as little as the insurer can get away with any time there is coverage for a claim.
So Washington law requires that whenever an insurer receives a claim for policy benefits, the company must process the claim fairly (or in “good faith,” as the law calls it).
To read the entire article recently published in the Daily Journal of Commerce, click here.