Insurers in Washington state beware. Even in the absence of any duty on the part of an insurer to defend, settle, or indemnify its insured, the insured may still pursue common law bad faith and Washington Consumer Protection Act (WCPA) claims based solely on the insurer’s procedural missteps in handling a claim. In the underlying action, RMS brought a class action lawsuit against Onvia. Onvia tendered the action to its liability insurer, St. Paul, but received no response until more than eight months later, when it received St. Paul’s letter denying coverage and defense. Onvia assigned its rights against St. Paul to RMS.

In the underlying action, RMS brought a class action lawsuit against Onvia. Onvia tendered the action to its liability insurer, St. Paul, but received no response until more than eight months later, when it received St. Paul’s letter denying coverage and defense. Onvia assigned its rights against St. Paul to RMS.

In the ensuing declaratory judgment action in St. Paul Fire and Marine Ins. Co. v. Onvia, Inc., the district court held that St. Paul did not breach the insurance contract or act in bad faith when it denied coverage and defense to Onvia. Resolution of RMS’s remaining claims against St. Paul, however, required an answer from the Washington Supreme Court on the following question:

Under Washington law, does an insured have a cause of action against its liability insurer for common law procedural bad faith for violation of the Washington Administrative Code and/or for violation of the WCPA, even though a court has held that the insurer had no contractual duty to defend, settle, or indemnify the insured?

The court responded in the affirmative, reasoning that both an insurer’s general duty of good faith and its specific duties under applicable claims-handling regulations should be read into every insurance contract. Accordingly, an insured may still pursue common law bad faith and WCPA claims based solely on the insurer’s procedural missteps in handling a claim, even though the insurer’s denial of coverage and defense was otherwise correct under the policy. While such claims are viable, however, an insured asserting them is not entitled to a presumption of harm or coverage by estoppel, and therefore must prove all of the elements of the claims, including actual damages.