Bad Faith Tactics Insurers Use on Business Owners
As a business owner in Washington State, you rely on commercial insurance to safeguard against risks like property damage, liability, or business interruptions. However, when insurers employ bad faith tactics to deny or delay valid claims, it can threaten your company's survival. In a state prone to wildfires in the east and severe storms in the west, these practices are increasingly common, leading to financial strain and operational disruptions. Under Washington's Insurance Fair Conduct Act (IFCA, RCW 48.30.015), business owners can fight back against bad faith, potentially recovering benefits, treble damages, attorney fees, and more. As a plaintiffs attorney specializing in bad faith commercial insurance claims in Washington, we help businesses from Seattle tech firms to Spokane manufacturers expose these tactics and win justice. This guide details common bad faith strategies insurers use on business owners, how to recognize them, and your legal options in 2025.
With insurance premiums surging in 2025 amid climate and economic challenges, empowering yourself against bad faith is more critical than ever.
Top Bad Faith Tactics Insurers Use on Washington Business Owners
Insurers have a duty to act in good faith, but violations occur frequently in commercial claims. Washington's regulations, like WAC 284-30-330, require prompt, fair handling, yet bad faith persists. Here are the most common tactics, drawn from state cases and consumer reports:
Unreasonable Claim Denials Without Basis - Insurers may deny valid claims outright, citing vague policy exclusions or misinterpreting terms. For business owners, this often hits property damage or interruption claims, where ambiguities should favor the insured. In Washington, such denials violate IFCA if unreasonable.
Failure to Properly Investigate Claims - A superficial or biased investigation—ignoring evidence or not consulting experts—breaches the duty to investigate reasonably. Commercial claims for fire or water damage often suffer this, delaying recovery.
Unreasonable Delays in Processing or Payment - Dragging out claims with endless document requests or slow responses hopes you'll abandon pursuit. State law mandates timely action—e.g., decisions within 30 days—but delays plague business interruption claims. This tactic violates WAC 284-30-330 and IFCA, leading to bad faith suits.
Offering Lowball Settlements Below Fair Value - Proposing settlements far under actual damages, ignoring business losses like revenue or relocation costs. In Washington, this breaches the duty to settle fairly, especially in liability claims where failure to defend reasonably exposes bad faith.
Misrepresenting Policy Terms or Rights - Deceptively downplaying coverage or misstating your rights under the policy erodes trust. Business owners often face this in complex commercial policies, where insurers hide exclusions. Washington's Consumer Protection Act and IFCA prohibit such deception.
Persistent Lack of Communication - Ignoring calls, emails, or requests for updates leaves you in limbo. This subtle tactic delays resolution and can support bad faith claims under state communication requirements.
Requiring Excessive or Arbitrary Documentation - Demanding unnecessary proofs or appraisals burdens business owners, stalling claims. While some documentation is needed, overreach violates reasonableness standards.
What to Do If You Suspect Bad Faith as a Business Owner
Document interactions, consider an appeal internally, and retain a bad faith attorney to send an IFCA notice before suing. Consult a lawyer to prove unreasonableness and recover damages.
Hold Insurers Accountable: Contact a Washington Bad Faith Lawyer Today
Bad faith tactics on business owners in Washington erode trust and profits. At Hogue Law Firm, we expose these practices and fight under IFCA for full recovery. If you're facing unfair treatment, schedule a free consultation. Call 509-934-1998 or fill out our online form.