Insurer's Duty of Good Faith

Posted Tuesday, August 07, 2007 by Ed Harper

An insurance company must act in good faith towards its insured. The insured is the individual or company who has been paying premiums. Their is a contractual relationship between the insured and the insurance company. There also are tort “duties” the insurance company as well as the insured to act in good faith.

According to the Washington Pattern Jury Instructions “an insurer has a duty to act in good faith. This duty requires an insurer to deal fairly with its insured. The insurer must give equal consideration to its insured’s interests and its own interests. An insurer who does not deal fairly with its insured fails to act in good faith. In proving that an insurer failed to act in good faith, an insured must prove that the insurer’s conduct was unreasonable, frivolous, or unfounded. The insured is not required to prove that the insurer acted dishonestly or that the insurer intended to act in bad faith.”

If insurance coverage is an issue, the insurer’s duty requires the company to conduct a reasonable investigation regardless of the ultimate conclusion regarding coverage. What is a reasonable investigation depends on the situation and the claim. We will visit what a reasonable investigation looks like in the next blog entry.

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