Washington’s Insurance Fair Conduct Act
What is IFCA?
Washington’s Insurance Fair Conduct Act (“IFCA” or the “Act”) took effect in 2007 to protect insureds against unfair practices by insurance companies. IFCA provides protections and remedies to insurance policyholders upon an unreasonable denial of a claim for coverage or for payment of benefits. Additionally, IFCA establishes a statutory scheme to ensure the fair handling of policyholder claims, and sets forth consequences in the event insurance companies violate the Act.
IFCA Violations
Codified under RCW 48.30 along with several sections from Washington’s Administrative Code (“WAC”), IFCA contains numerous provisions regulating the insurance industry. RCW 48.30.015 creates a cause of action in the event an insured party is “unreasonably denied a claim for coverage or payment of benefits.” The statute then cites to several WAC provisions that elaborate that an insurance company may violate IFCA in numerous ways, including, but not limited to the following:
- Failing to “complete its investigation of a claim within thirty days after notification of claim, unless the investigation cannot reasonably be completed within that time.”
- “Refusing to pay claims without conducting a reasonable investigation.”
- Denying “a claim on the grounds of a specific policy provision, condition, or exclusion” without “reference to the specific provision, condition, or exclusion” to be included in the denial “given to the claimant in writing.”
- “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.”
- “Compelling a first party claimant 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.”
The above is not an exhaustive list, and the WAC enumerates several other grounds for which an IFCA violation may be found.
Consequences of an IFCA Violation
Pursuant to RCW 48.30.015, upon a finding that an insurer has acted unreasonably in denying a claim for coverage or payment of benefits or has violated a rule in the WAC provisions, “the superior court may…increase the total award of damaged to an amount to exceed three times the actual damages” and “award reasonable attorneys’ fees and actual and statutory litigation costs, including expert witness fees.” This potential award of treble damages along with attorneys’ fees and costs (also discussed in a recent blog post on timber trespass by Beresford Booth Lawyer Todd J. Cook) helps to offset potential economic benefits insurance providers might find should they intentionally violate IFCA. IFCA can be a powerful tool for insured parties to hold their insurer accountable in the claims handling process.
Legal Counsel May Help
The lawyers at Beresford Booth have extensive experience counseling individuals through insurance disputes. If you are having difficulty with an insurance claim, we would be pleased to discuss your concerns and counsel you towards a positive resolution.