Supreme Court makes it easier to prove insurer bad faith
By Gregory P. Turner

Insurers will have more difficulty obtaining dismissal of bad-faith claims, based on a pair of recent decisions by the Washington Supreme Court.

In Smith v. Safeco Ins. Co., no. 73299-0 (Nov. 6, 2003) and Amer. States Ins. Co. v. Symes of Silverdale, Inc., no. 72817-8 (Nov. 6, 2003), the Supreme Court overruled recent case law suggesting that a policyholder must do more than present facts to show committed bad faith, and instead must prove bad faith as a matter of law.

In Smith, Safeco’s insured, Bryce, negligently injured Smith. Before any suit was filed, Smith asked Safeco to disclose the limits of Bryce's liability-insurance policy. Safeco did not have current contact information for Bryce, could not reach her, and could not obtain her permission to divulge policy limits. Safeco therefore refused to tell Smith the policy limits. Smith sued Bryce. In discovery responses, Safeco disclosed the policy limits.

Bryce and Smith settled. Bryce agreed not to pursue Smith's personal assets; Smith assigned to Bryce any claims she had against Safeco. Safeco brought a declaratory-judgment action, seeking a ruling that its pre-suit refusal to divulge policy limits was not bad faith. The trial court consolidated the declaratory and personal-injury actions, heard summary judgment motions, and held that Safeco did not commit bad faith. The Court of Appeals affirmed. The Supreme Court accepted review.