Insurance Companies Must Pay the Claim, or Pay the Piper

Randy Walton

Contributor

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It goes without saying that in the political battles between the insurance industry and consumer organizations like trial lawyer groups the insurance industry has one giant advantage: money... and lots of it. This perennial battle continues up north in Washington where the insurance industry is trying to overturn a law that would force insurers to pay up to triple damages and attorney's fees if the insurance fails to pay a legitimate personal injury claim then loses in court.

Insurance giants like Allstate, State Farm, Safeco and Farmers have poured more than $8 million into the referendum battle.

Supporters of the law say it forces insurance companies to pay legitimate claims in a timely and fair fashion and frees the courts from relatively minor cases that clog the system for months and even years. One supporter, the Washington Trial Lawyers Association, has raised almost $900,000 to fight the insurance industry over the referendum.

"Insurance companies have figured out that they can make more money if they don't pay your claim,'' said Washington state Rep. Steve Kirby.

Kirby and his fellow Washington state lawmakers heard so many complaints from policy holders who believed insurers weren't treating them fairly that earlier this year they passed a law called "The Fair Conduct Act." Hearings were held, the bill was revised -- even watered down, according to Kirby -- and both the House and Senate passed it. The governor readily signed it.

But the very next day a coalition, funded primarily by insurance companies, moved in to stop the law from going into effect by filing petitions for a voter referendum on the law.

The goal of the law of course, is to ensure insurance companies act in good faith, and pay legitimate claims in a timely fashion. Unfortunately, that is frequently not the case which forces many legitimate claimants to hire law firms like ours to file lawsuits against the negligent actors. The truth is there are often two victims. The person who was injured by the negligence, and the negligent party, who expected the insurance company to pay the claims (for which the premiums have been paid), but instead becomes a defendant in civil court.

For more information on this subject, please refer to the section on Car and Motorcycle Accidents.