Shockwaves went through the insurance industry when a Washington Court of Appeals determined in 2018 that insurance adjusters as well as the carrier could be named in bad faith suits. Known as the Koedalah Decision, this case went through the courts and could have national implications.
According to news reports, the claimants of the initial case were driving in Seattle when their pickup truck was struck by an uninsured motorcyclist who died in the accident. The Seattle Police Department determined that biker was riding at a high speed at the time of the crash. The truck was also damaged and an occupant was injured. The plaintiffs carried a policy with Allstate, which included coverage against underinsured motorists.
Despite asking for the maximum settlement amount of $25,000 included in the policy, the carrier offered $1,600 to the claimants with no explanation. When the claimants asked for an explanation of the low amount of the settlement offer, the carrier raised it to $5,000. The claimants filed a suit against Allstate, which prompted the carrier to raise the offer to $15,000.
Plaintiffs win initial case
The case subsequently went to jury trial. The carrier claimed that the claimant of the truck was distracted and went through a stop sign while talking on a cell phone, which led to the adjuster assessment that 70 percent of the fault laid with the claimant/plaintiffs. The jury disagreed, awarding plaintiffs $108,868.20 for injuries, medical expenses and time away from work.
The plaintiffs were not done
The plaintiffs then filed a bad faith insurance suit against both the carrier and its adjuster. Allstate filed a motion to dismiss the complaint, which removed liability of the adjuster. The case was then submitted by the court for review by the appeals court, which reversed the lower court’s decision of dismissal and found that the adjuster can be held liable for their assessment. The case was remanded to trial court.
The implications of the ruling
Two important takeaways about this ruling involving adjusters are:
Keeps case at state level: While federal courts typically favor large corporations, state courts tend to favor the plaintiffs.
Legal and financial intimidation: Adjusters who do award an acceptable amount to the claimant can now be singled out with a lawsuit; moreover, that lawsuit can affect such personal affairs as getting a loan to buy a home or vehicle. It also puts the adjuster through the stress of going to court.
The issue is still unfolding
One of the main issues for Allstate was the fact that the company initially low-balled the claimant, and then threw money at the problem when the claimant threatened legal recourse. Each step amounted to major increases before presenting any explanation of the settlement offer in court. The jury award and the appeals court decision could signal a change in dynamic for the insurance industry.