The Problem: Low-Balling Claims and the Lack of Legal Recourse

Auto insurance companies are paying far less than actual costs to repair or replace a damaged vehicle. This payment shortfall has been greatly exacerbated following the COVID-19 Pandemic triggering the widespread use of photo estimating and virtual claims processing by insurance companies.  Insurances companies undervaluing claims has become increasingly problematic, and the current legal framework, including the Insurance Fair Conduct Act (IFCA) and Consumer Protection Act (CPA), does not adequately support policyholders, especially in claims ranging from $3,000 to $10,000, therefore the marketplace is effectively unregulated as going to court is an outrageous and very timely solution.

Consumers are faced with a “second deductible” in the form of litigation and appraisal expenses to seek the full value of their insurance policy benefits.  Since these costs are generally unrecoverable, insurers use these additional costs to threaten the policy holder with an even lower recovery if they fight back.

The Solution: Support HB 1645  / SB 5721 – Protect Consumers with a Fair “Right to Appraisal” Process

HB 1645 & SB 5721 introduces a “Right to Appraisal” provision requiring all insurance policies to contain a “Right to Appraisal clause” that mandates the insurer pay the costs of the dispute resolution process if the policyholder achieves a higher settlement (at least $500 dollars) than the insurer’s offer, a much-needed reform. This bill would significantly level the playing field for consumers, ensuring a fair dispute resolution process for low-ball settlements therefore providing a direct incentive to offer fairer settlements upfront.

The Right to Appraisal provision in HB 1645 / SB 5721 is modeled after a successful regulation in Oregon, where insurers are required to pay appraisal costs when the policyholder achieves a higher settlement than the insurer’s settlement offer.

By adopting this new law, Washington State can provide policyholders with a mechanism to challenge unfair claims settlements ensuring that consumers are not forced to choose between accepting an unfair settlement or paying thousands of dollars and getting a lawyer trying to fight for what they are owed