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WPI 320.06 Violations of Insurance Regulations Related to Settlement of Claims

6A WAPRAC WPI 320.06Washington Practice Series TMWashington Pattern Jury Instructions--Civil

6A Wash. Prac., Wash. Pattern Jury Instr. Civ. WPI 320.06 (7th ed.)
Washington Practice Series TM
Washington Pattern Jury Instructions--Civil
April 2022 Update
Washington State Supreme Court Committee on Jury Instructions
Part XV. Insurance Bad Faith
Chapter 320. Insurance Bad Faith Actions
WPI 320.06 Violations of Insurance Regulations Related to Settlement of Claims
A violation, if any, of one or more of the following requirements is [a breach of the duty of good faith] [an unfair method of competition] [an unfair or deceptive act or practice in the business of insurance] [and] [a breach of the insurance contract]:
[Misrepresenting pertinent facts or insurance policy provisions.]
[Failing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies.]
[Failing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies.]
[Refusing to pay claims without conducting a reasonable investigation.]
[Failing to affirm or deny coverage of claims within a reasonable time after fully completed proof of loss documentation has been submitted.]
[Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.] [In particular, this includes an obligation to promptly pay property damage claims to innocent third parties in clear liability situations. If two or more insurers share liability, they should arrange to make appropriate payment, leaving to themselves the burden of apportioning liability.]
[[Unreasonably] compelling an insured to initiate or submit to litigation, arbitration, or appraisal to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in such actions or proceedings.]
[Attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made part of an application.]
[Making a claim payment to an insured or beneficiary not accompanied by a statement setting forth the coverage under which the payment is being made.]
[Asserting to an insured that it is the insurer's policy to appeal from arbitration awards in favor of insureds for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitrations.]
[Delaying the investigation or payment of claims by requiring an insured or his or her physician to submit a preliminary claim report and then requiring subsequent submissions which contain substantially the same information.]
[Failing to promptly settle claims, where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.]
[Failing to promptly provide a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement.]
[Unfairly discriminating against claimants because they are represented by a public adjuster.]
[Failing to expeditiously honor drafts given in settlement of claims. A failure to honor a draft within three working days after notice of receipt by the payor bank will constitute a violation of this provision. Dishonor of a draft for valid reasons related to the settlement of the claim will not constitute a violation of this provision.]
[Failing to adopt and implement reasonable standards for the processing and payment of claims after the obligation to pay has been established. Except as to those instances where the time for payment is governed by statute or rule or is set forth in an applicable contract, procedures that are not designed to deliver a check or draft to the payee in payment of a settled claim within fifteen business days after receipt by the insurer or its attorney of properly executed releases or other settlement documents are not acceptable. Where the insurer is obligated to furnish an appropriate release or settlement document to an insured or claimant, it must do so within twenty working days after a settlement has been reached.]
[Delaying appraisals or adding to their cost under insurance policy appraisal provisions through the use of appraisers from outside the loss area. The use of appraisers from outside the loss area is appropriate only where the unique nature of the loss or a lack of competent local appraisers make the use of out-of-area appraisers necessary.]
[Failing to make a good faith effort to settle a claim before exercising a contract right to an appraisal.]
[Negotiating or settling a claim directly with any claimant known to be represented by an attorney without the attorney's knowledge and consent. This does not prohibit routine inquiries to an insured claimant to identify the claimant or to obtain details concerning the claim.]
Use the brackets as appropriate depending on the causes of action alleged and facts of the case. This instruction should be given with WPI 310.03 (Per Se Violation of Consumer Protection Act) in consumer protection actions, and with WPI 60.03 (Violation of Statute, Ordinance, Administrative Rule, or Internal Governmental Policy—Evidence of Negligence) in negligence actions.
RCW 48.30.010(1) prohibits any person engaged in insurance from using unfair or deceptive acts or practices in the conduct of such business. RCW 48.30.010(2) authorizes the Insurance Commissioner to promulgate regulations that define certain minimal standards. The duties outlined are taken from WAC 284-30-330, which was amended in 2011 to clarify existing language.
Additional duties may be drawn from appropriate statutes or other insurance claims handling regulations found in WAC 284-30-300 through 284-30-750, which define minimal standards that become part of every insurance contract. St. Paul Fire & Marine Ins. Co., v. Onvia, Inc., 165 Wn.2d 122, 196 P.3d 664 (2008).
Single violations of WAC 284-30-330, et seq., are unfair and deceptive acts or practices as a matter of law, and are per se violations of the Consumer Protection Act (CPA). RCW 19.86.020 to.080. Truck Ins. Exch. v. Vanport Homes, Inc., 147 Wn.2d 751, 58 P.3d 276 (2002); Leingang v. Pierce Co. Med. Bureau, 131 Wn.2d 133, 151, 930 P.2d 288 (1997); Industrial Indem. Co. v. Kallevig, 114 Wn.2d 907, 923, 792 P.2d 520 (1990). RCW 48.30.010(2). Some are also unfair methods of competition. See the discussion of per se violations of the Consumer Protection Act in WPI 320.00 (Insurance Bad Faith—Introduction); see also WPI 310.00 (Consumer Protection Act—Introduction) and WPI 310.03 (Per Se Violation of the Consumer Protection Act) and its Comment.
The instruction uses the language of WAC 284-30-330 verbatim except that the language based upon WAC 284-30-330(7) (“[c]ompelling an insured to initiate or submit to litigation, arbitration, or appraisal … by offering considerably less than the amounts ultimately recovered …”) was modified for this edition by adding the word “unreasonably” in brackets to accord with case law holding that a reasonableness standard applies even though not explicit in the language of the regulation. See Perez-Crisantos v. State Farm Fire and Cas. Co., 187 Wn.2d 669, 389 P.3d 476 (2017); Am. Mfrs. Mut. Ins. Co. v. Osborn, 104 Wn.App. 686, 699–700, 17 P.3d 1229 (2001) (citing cases). Use the bracketed word “unreasonably” as applicable.
In 2013, the WPI Committee expanded the instruction so that it applies not only to CPA claims, but also to negligence claims and bad faith claims. The instruction was also revised to reflect changes to the underlying language from WAC 284-30-330.
[Current as of September 2018.]
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