A Washington Court of Appeals ruled in 2018 that adjusters could be named individually in bad faith lawsuits nationwide. This news has reportedly sent shockwaves through the insurance industry. The Keodalah Decision involves plaintiffs who filed a suit against Allstate Insurance and company’s adjuster.
The plaintiffs were driving a truck that was hit by an uninsured motorcyclist. While the truck was damaged and one passenger was injured, the motorcyclist died. The truck owner’s policy provided $25,000 in coverage against underinsured motorists.
The Seattle Police Department determined that the motorcyclist was traveling at a dangerous speed at the time of the crash. However, the insurance company offered $1,600 to the plaintiffs who had requested the maximum amount. When the plaintiffs asked for an explanation from the insurance company, it responded by simply raising its settlement to $5,000. The plaintiff then filed suit against Allstate, which upped its settlement to $15,000 before the trial. The plaintiffs rejected the offer and the case went to jury trial.
Jury sides with plaintiff
The carrier claimed in court that the plaintiff had run a stop sign while using a cell phone, and maintained that 70 percent responsibility rested on the plaintiff. The jury awarded the plaintiff $108,868.20 for lost wages, injuries and medical expenses.
Going after the adjuster
The plaintiff then filed a bad faith insurance suit against the carrier and its adjuster. The company filed a motion to dismiss the complaint, which led to the dismissal of the adjuster’s liability. The court submitted the case for review and the appeals court overturned the decision, ruling that the adjuster could be held liable. The case was remanded and sent back to trial court.
The impact of this ruling
There are several important reasons why this ruling is important, including:
Keeps it out of federal court:Many believe that state courts favor plaintiffs and cases involving the adjuster would more likely keep it in state court.
Intimidation: Adjusters can now be singled out and threatened with a lawsuit if the award is not considered satisfactory.These cases could impact the adjuster’s personal finances, such as those seeking a loan for a mortgage or purchasing a vehicle will be flagged because of the suit.
Higher cost to carrier: The adjuster will also need their own legal representation separate from that of their employer, which doubles the expense for the insurance company.
The future is uncertain
This case is still ongoing, but the ruling could impact how policies are written and interpreted. With Washington just up the coast, our neighbor’s ruling will likely also have a regional impact even though the federal courts have already weighed in. Whether the client is a plaintiff, carrier or adjuster, this case puts the insurance industry on notice.