Last month, a Washington State Court of Appeals ruled that individual insurance adjusters may be personally liable for violations of Washington’s bad faith statute, RCW 48.01.030. The court also ruled that adjusters may be personally liable for violations of Washington’s Consumer Protection Act, RCW

For its part, Washington’s bad faith statute states, in its entirety:

The business of insurance is one affected by the public interest, requiring that all persons be actuated by good faith, abstain from deception, and practice honesty and equity in all insurance matters. Upon the insurer, the insured, their providers, and their representatives rests the duty of preserving inviolate the integrity of insurance.2

In Keodalah v. Allstate, the Court of Appeals noted that the related statute, RCW 48.01.070, defines “person” as “any individual, company, insurer, association, organization, reciprocal or interinsurance exchange, partnership, business trust, or corporation.” The court held that an individual adjuster acting on behalf of an insurer is a “representative” of the insurer. Therefore, the court ruled, “under the plain language of the [bad faith] statute, [the adjuster] had the duty to act in good faith.”3

Keodalah is the latest case affirming the broad application of Washington’s bad faith statute.4 In addition, as noted by the court in Keodalah, the bad faith statute applies not only to insurers, but to insureds (and their representatives).5

Regarding Washington’s Consumer Protection Act (the “CPA”), the Keodalah court noted that the Supreme Court of the State of Washington had declined to include a contractual relationship as a requirement for claims under the CPA.6 Therefore, the court noted, a claim under the CPA requires a showing of only these five elements:

(1) an unfair or deceptive act or practice, (2) that act or practice occurs in trade or commerce, (3) a public interest impact, (4) injury to the plaintiff in his or her business or property, and (5) a causal link between the unfair or deceptive act and the injury.7

The court concluded that an individual insurance adjuster could have personal liability under the CPA if these five elements are present.8

These rulings affirm the Washington legislature’s desire to protect policyholders from unreasonable and dishonest insurers and their representatives.
1 Keodalah v. Allstate Ins. Co., 413 P.3d 1059 (Wash. App. 2018).
2 RCW 48.01.030.
3 Keodalah, 413 P.3d at 1061, ⁋ 11.
4 See, e.g., Merrriman v. American Guarantee & Liability Ins. Co., 198 Wash. App. 594, 396 P.3d 351 (2017); Lease Crutcher Lewis WA v. Nat’l Union Fire Ins. Co., 2009 WL 3444762 (W.D. Wash.) (both holding that the bad faith statute applies to insurance claim adjusting entities).
5 Keodalah, at 1062, ⁋ 15.
6 Citing Panag v. Farmers Ins. Co. of Wash., 166 Wash.2d 27, 204 P.3d 885 (2009).
7 Keodalah, at 1064, ⁋⁋ 19-21.
8 Id. at 1065, ⁋⁋ 23-24.