For many individuals who suffer a property loss, the most stressful time is the adjustment period with their own insurance or the insurance of the party that caused the loss. Often, during the adjustment people need money for temporary housing or have lost all their personal possessions and are trying to rebuild their lives or businesses. The Hawaii Supreme Court recognized the rights of a third-party claimant to bring an intentional infliction of emotional distress (IIED) cause of action when an insurer’s outrageous behavior causes harm. This case leaves the door open to a potential IIED cause of action in first party matters.

In Young v. Allstate Insurance Company,1 the 84-year-old female plaintiff suffered injuries when her car was rear-ended by the Allstate insured. Allstate contacted the plaintiff, letting her know it would provide her with quality service and specifically told her that she did not need an attorney. Additionally, Allstate provided the plaintiff with a "Quality Service Pledge" that assured her "You’re in Good Hands with Allstate."

Allstate did not live up to the bargain and offered less than her actual damages. The plaintiff filed suit, and Allstate countersued claiming the plaintiff was negligent even though Allstate’s insured had fallen asleep at the wheel, causing the accident. The matter went to trial, and a jury awarded the plaintiff $200k. She then filed a lawsuit for bad faith and IIED against Allstate. The trial court dismissed the bad faith claim because there was no contractual relationship with the insurer and dismissed the IIED claim because the insurer’s action was not outrageous.

The matter went to the Hawaii Supreme Court, which affirmed dismissal of the bad faith claim and reversed dismissal of the IIED claim. An allegation of IIED in Hawaii requires the following: (1) the conduct allegedly causing the harm was intentional or reckless, (2) the conduct was outrageous, and (3) the conduct caused extreme emotional distress to another. The Supreme Court held average members of the community could find the insurer’s actions "outrageous."

Young establishes that third-party claimants may seek damages for IIED against insurers in Hawaii. When Hawaii insurers adjust claims, they should consider how their actions directly affect third parties recovering under the insurance of another.

1 Young v. Allstate Ins. Co., 198 P. 3d 666, 119 Haw. 403 (Haw. 2008).