AN ACT Relating to unfair and deceptive insurance practices; and adding new sections to chapter 48.30 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. A new section is added to chapter 48.30 RCW to read as follows:

Unless the context clearly requires otherwise, the following definitions apply throughout sections 2 and 3 of this act.

(1) "Claimant" means any individual, corporation, association, partnership, or other legal entity asserting a claim against any individual, corporation, association, partnership, or other legal entity insured with respect to the claim under an insurance policy or insurance contract of an insurer.

(2) "Insured" means an individual, corporation, association, partnership, or other legal entity asserting a right to payment or legal defense under an insurance policy or insurance contract arising from the occurrence of the contingency or loss covered by such policy or contract and includes any direct or contingent beneficiary to such policy or contract.

(3) "Insurance policy" or "insurance contract" means any contract of insurance, indemnity, or annuity issued, proposed for issuance, or intended for issuance by an insurer.

(4) "Investigation" means all activities of an insurer directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract.

(5) "Notification of claim" means any notification whether in writing or other means acceptable under the terms of an insurance policy or insurance contract, to an insurer or its agent, by a claimant, that reasonably apprises the insurer of the facts pertinent to a claim.

NEW SECTION. Sec. 2. A new section is added to chapter 48.30 RCW to read as follows:

(1) It is an unfair and deceptive practice for an insurer to fail to act in good faith when dealing with insureds and claimants.

(2) The following methods, acts, and practices in the settlement and payment of insurance claims are unfair and deceptive acts and practices:

(a) Misrepresenting pertinent facts or insurance policy provisions to insureds who inquire about or actually make claims for policy benefits;

(b) Failing to acknowledge and act reasonably promptly with respect to notification of claims arising under insurance policies when made by insureds or claimants;

(d) Failing to affirm or deny coverage of claims to insureds within a reasonable time after proof of loss statements have been completed;

(e) Not attempting in good faith to effectuate prompt, fair, and equitable settlements of claims of insureds or claimants when liability has become reasonably clear;

(f) Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately recovered in actions brought by such insureds;

(g) Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the specific payment is being made;

(h) Failing to settle promptly claims of insureds or claimants under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage when liability has become reasonably clear;

(i) Failing to provide to insureds or claimants a reasonable explanation of the basis in the insurance policy in relation to the facts or applicable law for denial of a claim or for the offer of a compromise settlement;

(j) Failing to issue a draft in payment of a claim within five business days after receipt of properly executed releases or other final settlement documents; and

(k) Failing to honor drafts given to insureds or claimants in settlement of claims within three business days after the deposit of the draft in a federal reserve bank.

NEW SECTION. Sec. 3. A new section is added to chapter 48.30 RCW to read as follows:

(1) Any insured or claimant injured in the conduct of the settlement of an insurance claim in his or her person or property by an unfair or deceptive method, act, or practice as defined or prohibited by sections 1 and 2 of this act and RCW 48.30.010, may bring an action in superior court to recover the actual damages sustained, together with the costs of the action. The court may, in its discretion, increase the award of damages to an amount not to exceed three times the actual damages not to exceed twenty-five thousand dollars. The court shall award reasonable attorneys' fees and costs as set forth in RCW 4.84.010 to any insured or claimant who is the prevailing party in any such action.

(2) The remedies set forth in this section and sections 1 and 2 of this act are independent of and in addition to any remedies an insured or claimant may have under chapter 19.86 RCW, the consumer protection act.

(3) Nothing in this section and sections 1 and 2 of this act is intended to modify rules adopted by the commissioner in accordance with RCW 48.30.010.