In Washington State, understanding how first-party insurance coverage works is essential for anyone involved in an accident. First-party coverage includes Personal Injury Protection (PIP) and Uninsured/Underinsured Motorist (UM/UIM) coverage. This blog discusses how PIP, UM and UIM coverage work in Washington State as well as how the Insurance Fair Conduct Act (IFCA) comes into play.
1. How Does Washington’s 1st Party Coverage Work?
In Washington, first-party coverage refers to insurance coverage that directly compensates the insured (the policyholder) for their own damages, regardless of who is at fault in an accident. Common types of first-party coverage include:
- Personal Injury Protection (PIP): Covers medical expenses, lost wages, and other benefits for the policyholder and passengers after an accident. This is similar to MedPay in Idaho.
- Uninsured/Underinsured Motorist (UM/UIM) Coverage: Protects the insured if they are involved in an accident with a driver who has insufficient or no insurance. It covers damages that the at-fault party’s insurance does not fully compensate.
Washington’s insurance system mandates that PIP and UIM are offered to policyholders, but they can be rejected in writing.
2. Rejection Forms for PIP – Reform It
In Washington, Personal Injury Protection (PIP) must be offered by insurers, but policyholders have the option to reject PIP coverage. The rejection must be made in writing, and if the insurer does not obtain a written rejection, the coverage is presumed to be in force.
A common area of discussion is whether reforms are needed for how rejection forms are managed, ensuring policyholders are fully informed of the consequences of rejecting PIP coverage and whether changes to the law should require more stringent processes to reject coverage.
3. Recovering Attorney’s Fees on UIM – How Does That Work?
Mahler, Hamm, and Winter are important cases in Washington state that address the recovery of attorney fees in relation to Underinsured Motorist (UIM) claims.
- Mahler v. Szucs (1993): Established the “made whole” doctrine in Washington, allowing insureds to recover their attorney fees incurred in recovering benefits under first party coverage. The fees can reduce any lien claims by the insurer.
- Hamm v. State Farm (2001): Confirmed the ability of the insured to recover attorney fees from the UM carrier, especially in situations where the carrier contests the amount of the claim.
- Winter v. State Farm (2004): Clarified the reimbursement and reduction of the insurance company’s PIP lien by attorney fees when the insured recovers under UIM.
These cases allow insured individuals in Washington to recover attorney fees when litigating with their UIM carriers, reducing the cost burden on the insured.
4. UIM Always Stacks in Washington
In Washington, Underinsured Motorist (UIM) coverage stacks. This means that policyholders can combine the coverage limits from multiple policies or vehicles under one insurance company to increase their available compensation after an accident involving an underinsured driver.
For example, if a tortfeasor has a liability policy of $100,000 and the injured party has $100,000 UIM coverage, they may “stack” the coverage, allowing for up to $200,000 in total UIM benefits. This is quite different from Idaho, where stacking of UIM coverage is often restricted or prohibited by policy language.
5. UIM Statute of Limitations (SOL) Considerations
In Washington, the Statute of Limitations (SOL) for personal injury claims, including claims involving UIM, is generally three years from the date of the accident. However, it’s crucial to review specific policies, as some insurance policies may have shorter or longer contractual limitations. Always check the policy language to avoid missing critical deadlines, but no SOL should be less than three years under standard Washington law.
6. IFCA Introduction
The Insurance Fair Conduct Act (IFCA) is a Washington state law designed to protect policyholders from unfair practices by their insurance companies. IFCA allows policyholders to sue their insurers if the insurer:
- Unreasonably denies a claim for coverage or payment of benefits.
- Violates insurance regulations, such as failing to act in good faith or refusing to provide timely responses.
IFCA allows for additional damages and attorney fees to be awarded if the insurer is found to have violated these duties.
7. How To Set Up IFCA Cases
To set up an IFCA case, your attorney should follow these steps using standard letters:
- Identify the Issue: Determine whether the insurer has unreasonably denied benefits or violated a specific insurance regulation.
- Prepare a 60-Day Notice Letter: Send a formal notice to the insurance company, outlining the basis of the claim, detailing the unreasonable conduct, and referencing any applicable regulations. This is required before filing an IFCA lawsuit.
- Gather Documentation: Include all relevant documentation that supports the claim, such as the policy, claim correspondence, medical records, and any other supporting evidence.
- Follow-Up: Track the insurer’s response during the 60-day period. If the insurer fails to resolve the issue within that time frame, you are clear to proceed with litigation under IFCA.
- IFCA Demand Letter Template: Customize your standard demand letter to ensure that it highlights specific IFCA violations and any unreasonable delays or denials in handling the claim.
Speak to an Experienced Personal Injury Attorney Today
GLP Attorneys has supported clients with their personal injury cases for over three decades. GLP Attorneys has experience achieving justice for clients who have been involved in car accidents, motorcycle accidents, trucking accidents, and insurance bad faith claims.
If you have been injured in an accident, call 800-273-5005 or email our attorneys at attorneys@glpattorneys.com to schedule a free lawyer consultation.