Washington State Supreme Court Ruling Seen Favorably by Industry

The Washington State Supreme Court’s unanimous decision affirming a lower court’s ruling that said insurers need not include all possible reasons for denying a claim when determining if they have a duty to defend a policyholder is a victory for consumers, according to the National Association of Independent Insurers.

NAII filed a friend of the court letter in the case of Hayden vs. Mutual of Enumclaw, which involved the issue of a company’s decision not to defend a policyholder. “The supreme court’s ruling to uphold the lower court’s decision ensures that consumers will not be saddled with higher liability insurance premiums,” said Monika McGuire, NAII senior counsel. “This victory is one insurance companies and consumers can celebrate together.”

The Washington case initially involved the business of grafting fruit buds to rootstock to produce different types of fruit trees. When there was damage to the rootstocks, Hayden Farms eventually sued Krause, who stored the rootstock, for breach of contract and negligence. Krause had a liability policy with Mutual of Enumclaw, which declined Kraus’ request for defense saying no coverage existed due to the exclusions contained in the policy. Krause then settled with Hayden for $500,000 and as part of the settlement, assigned all of his rights against Mutual of Enumclaw to Hayden Farms. Hayden then sued the mutual, claiming bad faith in the denial of coverage. The trial court granted the mutual’s motion and the decision was upheld by the appellate court.

Topics Legislation Washington