Winning a Bad Faith Lawsuit Against Your Commercial Insurer
Commercial insurance is essential for protecting your business from risks like property damage, liability, or interruptions, but what happens when your insurer acts in bad faith? In Washington State, where businesses face challenges from wildfires, storms, and economic pressures, bad faith denials can devastate operations. Under Washington's Insurance Fair Conduct Act (IFCA, RCW 48.30.015), commercial policyholders can sue for bad faith, potentially winning benefits, treble damages, attorney fees, and more. As a plaintiffs attorney specializing in bad faith commercial insurance lawsuits in Washington, we guide businesses from Seattle startups to Spokane manufacturers to victory against unfair practices. This guide outlines how to win a bad faith lawsuit against your commercial insurer and key strategies.
In 2025, as insurance premiums continue to rise, knowing how to hold insurers accountable is crucial for your business's survival.
What Constitutes Bad Faith in Commercial Insurance Claims?
Bad faith isn't just a denial—it's an insurer's unreasonable breach of the duty of good faith and fair dealing. For commercial policies, this often involves mishandling claims for property damage, business interruption, or liability. Common examples include:
Unreasonable denials without proper investigation.
Delays in processing or paying valid claims.
Lowball settlements far below actual losses.
Misrepresenting policy terms or coverage.
Failing to defend in liability suits, as in refusal-to-defend cases.
Washington courts emphasize that insurers must prioritize the policyholder's interests, and violations can lead to extracontractual damages.
Grounds for Winning a Bad Faith Lawsuit Against Your Commercial Insurer
To win, you must prove the insurer acted unreasonably, causing harm. Strong grounds include:
Ambiguous Policy Language - Courts interpret ambiguities against the insurer.
Failure to Investigate - Superficial reviews or ignoring evidence support claims, per state regulations like WAC 284-30-330.
Refusal to Defend or Settle - In liability contexts, bad faith arises from not providing a defense when there is conceivable coverage or not abiding by the duty to explore settlement and protect the insured when defending, especially when an excess verdict is possible or likely.
Post-Litigation Misconduct - Even after suits begin, bad faith can occur.
IFCA Violations - Unreasonable denials or delays directly trigger IFCA claims, allowing enhanced damages.
Evidence like internal insurer emails or expert testimony strengthens your case.
Steps to Win Your Bad Faith Lawsuit in Washington
Winning requires strategic preparation. Follow these steps:
Document the Claim Process - Gather all correspondence, policy documents, denial letters, and evidence of losses. This builds a timeline showing unreasonableness.
Consider Filing a Complaint with the OIC - Consider submitting your claim to the OIC for free investigation—they've recovered millions and can uncover bad faith without barring your lawsuit.
Send an IFCA Notice through an Attorney - Provide 20 days' written notice detailing violations, giving the insurer a chance to cure before suing.
Hire an Experienced Bad Faith Lawyer to Litigate Your Case - Attorneys analyze your case, file in superior court, and pursue discovery. Many work on contingency.
Prove Harm and Unreasonableness - In court, demonstrate the denial's impact (e.g., business losses) and the insurer's bad faith through evidence.
Negotiate or Go to Trial - Many settle post-discovery; if not, juries often favor policyholders in egregious cases.
Potential Damages in a Successful Bad Faith Commercial Lawsuit
Wins can exceed policy limits:
Policy benefits plus interest.
Treble damages under IFCA (up to three times actual harm).
Attorney fees and costs.
Emotional distress or punitive damages in severe cases.
Extracontractual recoveries.
When Should You Sue Your Commercial Insurer for Bad Faith in Washington?
Sue if internal appeals and OIC complaints fail, and bad faith is evident. Early legal consultation preserves evidence and meets deadlines.
Secure Your Win: Contact a Washington Bad Faith Commercial Insurance Lawyer Today
Winning a bad faith lawsuit against your commercial insurer in Washington requires expertise in IFCA and state case law. At Hogue Law Firm, we fight for businesses statewide to recover what they're owed and deter future misconduct.
If you're facing a bad faith denial, schedule a free consultation. Call 509-934-1998 or fill out our online form. Turn the tables on your insurer today.