People purchase insurance policies with the expectation that they will be able to count on the insurer to take care of covered events. In many cases, that’s exactly what happens, but there are times when insurers may deny claims.
In Washington State, insurers must act in good faith when they’re processing claims. Denying a claim without a valid reason or if they don’t fully investigate, they may cross the line into what’s considered “unreasonable denial of a claim for coverage or payment of benefits.” This is outlined in RCW 48.30.015.
What is unreasonable denial?
Insurance companies have a duty to evaluate claims fairly and promptly. This is the case for all policies, including auto, homeowners and health insurance. When a claim is denied, the insurer must provide a clear explanation of why the claim was denied. Simply saying “no” without an investigation or justification isn’t ever acceptable.
Washington law considers a denial unreasonable if the insurer acts without a reasonable basis or fails to conduct a reasonable investigation before refusing to pay a claim. For example, if an insurer ignores relevant evidence, misrepresents policy language or delays a claim without cause, these actions may qualify as bad faith.
The consequences of a denial that’s unreasonable is more than just a reversal of that decision. The law allows policyholders to seek actual damages, attorney fees and potentially punitive damages. The court can also award other damages if the denial was egregious.
Insured individuals must understand their policies so they can take action if there are ever any issues related to claims. When there are denials that fall within the realm of unreasonable, it’s critical that the policyholder explores their options to address the matter. Working with someone familiar with these matters may be beneficial.
