Washington Appeals Court Rules No Coverage for Property Damage Caused by Leaking Underground Tanks After Insurance Policies Expire

Last week, the Washington Court of Appeals upheld the denial of insurance coverage for property damage caused by a release of gasoline from an underground storage tank (“UST”). In Walla Walla College v. Ohio Casualty Ins. Co., a panel in Division Three of the Washington Court of Appeals ruled that there was no insurance coverage for damage to property that occurred ten years after the USTs were improperly installed and eight years after the insurance policies expired. View full article (PDF).

Where the Insured Alleges only “Procedural” Claims-Handling Violations Proof of “Actual Harm” Required, and Remedies Limited

On 26 November 2008, the Washington Supreme Court issued its decision in St. Paul Fire and Marine Ins. Co. v. Onvia, Inc., concerning an insured’s standing to sue for bad faith and violations of the Washington Consumer Protection Act (“CPA”) where the insurer properly denied defense and indemnity, but violated Washington claims-handling regulations concerning the timing of communications with the insured. The Court held that the insured could maintain a claim for improper claims-handling in the absence of a duty to defend or indemnity, but refused to apply a presumption of harm, and limited the remedies available. View full article (PDF).

Washington Supreme Court Clarifies Distinction between Contribution and Subrogation Claims between Insurers, and Refines Standard for Prejudice for Late Notice Defense

On 4 September 2008, the Washington Supreme Court issued its decision in Mutual of Enumclaw Ins. Co. v. USF Ins. Co., concerning the distinction between contribution and subrogation claims between insurers and the rules of tender that apply to each, and clarifying the standard for demonstrating “actual prejudice” prong of the “late notice” defense. View full article (PDF).

A Sterling (Alaska) Result: The Alaska Supreme Court Denies Coverage for Leaked Gasoline under the Absolute Pollution Exclusion

On 13 June 2008, the Alaska Supreme Court issued its opinion in Whittier Properties Inc. v. Alaska National Insurance Company, concerning the interpretation of the “absolute pollution exclusion.” The Court held that leaked gasoline was unambiguously a pollutant, rejected the insured’s arguments for coverage under the “personal and advertising liability” section, and held that an insured cannot create coverage for an excluded risk by agreeing to indemnify a third party for the same. This case was successfully defended by a team of attorneys from Lane Powell’s Anchorage, Alaska office, including Brewster Jamieson, Andrea Girolamo-Welp, Brad Ambarian and Ben Roesch. View full article (PDF).

Alaska Supreme Court Finds No Coverage Between Policy Cancellation and Reinstatement

On 23 May 2008, the Alaska Supreme Court issued its opinion in Amos v. Allstate Insurance Company, concerning an insurer’s indemnification obligation for bodily injuries occurring in the period between the insurance policy’s cancellation for non-payment of premium and reinstatement. View full article (PDF).

Washington Court of Appeals holds that “Washington law does not, in fact, force insurers to pay for losses that they have not contracted to insure”

On 7 April 2008, the Washington Court of Appeals issued its decision in Polygon Northwest Co. v. American National Fire Ins. Co. et al., concerning trigger-of-coverage, contribution, and allocation of damages between multiple primary and excess insurers on the risk in a construction defects case. View full article (PDF).

Court Holds Any Contractual Waiver of Uberrimae Fidei Must be Explicit

On 20 March 2008, the U.S. Court of Appeals for the Ninth Circuit rendered its decision in New Hampshire Ins. Co. v. C’Est Moi, Inc., addressing the maritime insurance doctrine of Uberrimae Fidei, or the duty of the assured and insurer of utmost good faith, for the second time in as many months. View full article (PDF).

Oregon Supreme Court Limits Punitive Damage Awards for Insurer Bad Faith

On 6 March 2008, the Oregon Supreme Court rendered its decision in Goddard v. Farmers Ins. Co. of Oregon, holding that any punitive damage award for an insurer’s bad faith failure to settle a third-party claim within policy limits must ordinarily be limited to four times the amount of compensatory damages. Under the “due process” clause of the United States Constitution, “excessive” punitive damages are prohibited. However, courts have generally held that the determination of “excessiveness” is case-specific and hinges on several non-quantifiable factors. The Goddard case, therefore, represents a potentially significant step towards greater predictability for insurers’ punitive damages exposure. View full article (PDF).

U.S. Supreme Court Curtails Investor Lawsuits: Possible Effects on Subprime Exposure

The United States Supreme Court dealt a significant blow to investor lawsuits in a decision issued on January 15, 2008. In Stoneridge Investment Partners v. Scientific-Atlanta, Inc. (06-43), the Supreme Court curbed the ability of shareholders to recover damages from “secondary” parties, which could include investment banks, lawyers, accountants, consultants and other parties. View full article (PDF).

A Ray of Hope for Washington Insurance Defense Law

Insurance companies in Washington are still allowed to make good-faith mistakes. On November 15, 2007, the Honorable Ronald B. Leighton of the U.S. District Court for the Western District of Washington held that an insurance company’s good-faith mistake is not enough to turn a $25,000 insurance policy into a $2 million bad faith claim. Judge Leighton granted full summary judgment to defendant Sentry Insurance in the matter of Taylor v. Sentry Group of Companies, et al., No. C06-5497RBL. The victory for Sentry is one piece of good news for insurance companies in Washington, which have faced a series of tough judicial and legislative decisions in recent months. View full article (PDF).

Voters Approve Insurance Fair Conduct Act

On November 6, 2007, Washington voters approved R-67, a referral to the people of the legislation entitled “Insurance Fair Conduct Act.” We first reported on this legislation in May, when it was signed by Gov. Christine Gregoire. The referendum effort to repeal the legislation stayed the effective date. Now that voters have approved this legislation, the Act will go into effect on December 6, 2007. View full article (PDF).

Court Puts Teeth (Well, Tusks, Actually) into Duty to Defend

Washington Passes Stringent Insurance Fair Conduct Act

On May 15, 2007, Washington State Governor Christine Gregoire signed the Insurance Fair Conduct Act into law. The Act allows recovery of uncapped treble damages for unreasonable denial of a claim for coverage or payment of benefits, and recovery of uncapped treble damages for violation of certain insurance regulations. View full article (PDF).

Governor Gregoire Signs Insurance Fair Conduct Act into Law

On May 15, 2007, Governor Christine Gregoire signed the Insurance Fair Conduct Act into law. The Act allows recovery of uncapped treble damages for unreasonable denial of a claim for coverage or payment of benefits, and recovery of uncapped treble damages for violation of certain insurance regulations.View full article (PDF).

Critical Steps Even If You Think There Is No Coverage: Safeguards Against High Anxiety

The standards by which your investigations are conducted, the manner in which and reasons for which you denied coverage, your awareness or lack of awareness of code provisions in handling claims (e.g., WAC 284-30, et seq.), internal e-mails, and attorney work product are all potentially discoverable and could demonstrate that you acted in bad faith when denying a claim. Even if you are correct that the claim is not covered, if you do not investigate, document, reserve your right to deny, and timely deny a claim you could be liable for bad faith or a Consumer Protection Act violation. View full article (PDF).

Bad Faith in Washington

An insurer’s bad faith can give rise to two related causes of action under Washington law: 1) a cause of action for bad faith sounding in tort, and 2) a cause of action for unfair trade practices pursuant to the Washington Consumer Protection Act (“WCPA”). See Overton v. Consolidated Ins. Co., 145 Wn.2d 417, 433 – 434, 38 P.3d 322 (2002). The WCPA cause of action is derivative of the tort cause of action. See Griffin v. Allstate Ins. Co., 108 Wn. App. 133, 148 n. 52, 29 P.3d 777 (2001). Although the two causes of action are interrelated, they do have distinct elements of proof and damages. View full article (PDF).

Insurance Bad Faith Law in the State of Washington

The article on bad faith is a survey and summary on bad faith law in Washington. View full article (PDF).

Ethical Issues in Liability Defense: How Do Insurers and Defense Counsel Properly Meet Their Obligations to the Insured Client?

This article deals with the ethical obligations of defense counsel retained by an insurer. View full article (PDF).