Washington Case Law Update: In Absence of a Special Relationship, Insurer Owes No Duty to Advise on Adequacy of Coverage

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Washington Case Law Update: In Absence of a Special Relationship, Insurer Owes No Duty to Advise on Adequacy of Coverage

From the desk of Kyle D. Riley: Following motor vehicle accidents, especially accidents that result in severe injuries, claims against the at-fault insured may exceed policy limits.  In that case, can the at-fault insured file a third-party complaint against their insurer on the grounds that the insurer owed them a duty to counsel or advise on the adequacy of coverage and policy limits? Read on to find out.

Claims Pointer: In this case arising out of an injured pedestrian, the Washington Court of Appeals considered whether the driver’s insurer owed a duty to advise, review, or counsel the driver on the adequacy of insurance coverage.  The court held that because there was no evidence of a “special relationship” between the insurer’s agents and the driver, the insurer and its agent owed no duty to advise, review, or counsel the driver on adequacy of coverage.  This case serves as a reminder of the fact that conversations between insureds and agents could expose the insurer and its agents to liability.

Norris v. Farmers Insurance Co., 76236-2-I, Washington Court of Appeals Div. I (March 19, 2018) (unpublished).

Jeffrey and Terri Norris (collectively “Norris”) where driving their vehicle when they struck and injured a pedestrian, Junfang He.  Junfang He filed suit, alleging damages exceeding the liability limits in Norris’ insurance policy with Farmers Insurance Group (“Farmers”).  Farmers extended a settlement offer for policy limits, but Junfang He declined the offer.  Norris filed a third-party complaint against Farmers, alleging that Farmers was negligent in advising and counseling Norris on their policy limits.  Farmers asked the trial court to dismiss the complaint, on the grounds that it owed no duty to Norris and that there was no special relationship that may have created a duty.  Following review, the the...

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