Washington Supreme Court Limits the Scope of the Insurance Fair Conduct Act

Surety Law Update Spring 2017

Recently, the Washington Supreme Court narrowly interpreted the Insurance Fair Conduct Act (“IFCA”), limiting the scope of conduct that constitutes a violation under the act. In Isidoro Perez-Crisantos v. State Farm Fire & Casualty Company, the Court determined whether a violation of the insurance regulations under the Washington Administrative Code (“WAC”) constituted a violation of IFCA. 187 Wn.2d 669 (Feb. 2, 2017). Since the enactment of IFCA, claimants have asserted that a violation the WAC provisions, even a merely technical or procedural violation, was a violation of IFCA and subjected insurers and sureties to the increased penalties under the Act, including treble damages and the claimant’s reasonable attorneys’ fees. The Court disagreed and held that a cause of action under IFCA could not be predicated solely on a violation of the WAC regulations. Instead, a cause of action under IFCA will only exist if there was an “unreasonabl[e] deni[al] of a claim for coverage or payment of benefits.”

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