Category: Washington OIC

Will 2026 Bring Meaningful Regulatory Updates to Washington Policyholders?

Washington’s Office of the Insurance Commissioner has been working on updates to our state insurance regulations since July 2025. The coming year may see these updates become final.

Washington State’s insurance regulations help level the playing field between consumers and insurance companies. When a loss happens, the consumer is typically struggling with property damage or injury, and doesn’t understand the mechanics of the claims process or the insurance policy fine print. The company, on the other hand, has the resources, knowledge, and expertise. This puts the policyholder at a disadvantage.

The proposed regulatory updates could help fix this. First, they formally define an insurance “claim.” You might think that whether a person has made an insurance “claim” would be basic. But basic doesn’t always mean easy to define (as anyone who’s watched NFL referees struggling to define a “catch” can confirm!). What often happens is the insured has a loss, calls their insurer in confusion, and then thinks they have a claim open only to find out, months later, that the insurer never actually opened the claim. This can lead to problems like damage getting worse, evidence being lost, and even unscrupulous insurers leveraging the delay against the policyholder. At least one court has held that policyholders have no legal recourse unless they explicitly demand their insurance benefits using the right “magic words.”

The proposed regulation properly places the onus to recognize and investigate claims on the party with superior resources: the insurer. 

Second, the proposed rules require transparency when insurers use databases to estimate losses. Computerized databases and estimating software can help in calculating the cost to repair property following a loss—when properly used as one tool that is a part of a comprehensive and fact-based investigation. But, too often, these databases are used as the end of the carrier’s investigation, not a starting point, resulting in a claims payment divorced from the facts, lacking the benefit of a complete investigation or the judgment of appropriate experts. Time and again, attorneys are approached by policyholders whose insurer insisted on paying only the amount generated by an arbitrary and opaque database even though no local contractor can complete the work for that price. This practice shifts the burden of investigating to the insured, who must now work with their contractor and appropriate experts to itemize the reasons why the work cannot be performed for the price in the insurer’s database. It delays making the insured whole after a loss. It pressures insureds to accept less than the policy entitles them to. 

OIC’s proposal would fix this by specifying that a reasonable investigation does not consist solely of blind reliance on database pricing and by requiring insurers who use these databases to disclose their data.

Third, the new rules would require insurance companies to promptly approve emergency mitigation. Homeowners’ insurance policies typically require the homeowner to perform emergency mitigation and can permit the insurer to terminate coverage for losses that are made worse by the insured’s failure to do so. When insurers drag their feet in approving emergency mitigation, the policyholder risks a loss of coverage, further damage to their property, and paying out of pocket for work that their carrier may later refuse to cover.

Requiring insurers to approve emergency mitigation promptly avoids placing the vulnerable and unsophisticated insured in the position of making important decisions without the benefit of the insurer’s superior expertise and resources. 

Fourth, the Insurance Commissioner’s new regulation would require insurance companies to share their documents about a claim with the policyholder. Attorneys routinely see insurer claim files kept secret from the insured only to be revealed during discovery in litigation.

Requiring transparency during the claim permits the insured to address issues before claims reach the point of a lawsuit. A consumer in full possession of the facts can point out problems while there is still time to fix them, provide missing information the carrier overlooked, and otherwise protect their interests.

Hopefully, the Office of the Insurance Commissioner will make finalizing these updates a priority in 2026.

Gun Rights Legal Defense Fund is “Insurance” Says Washington Court of Appeals

You might think the question “what is insurance” is an obvious one. Most Americans probably understand, basically, that insurance is the thing where you pay somebody today and, if something bad happens tomorrow, they pay you. Health, auto and life insurance are universal enough that most folks have an intuitive understanding of them. But whether something is insurance can be less straightforward out of those common contexts.

We’ve previously blogged about this question. That discussion came up in the context of “health sharing ministries,” where members of the same church agree to pool funds in case someone gets hurt or sick. The question is back in the legal news with the Washington Court of Appeals’ recent decision Armed Citizens’ Legal Defense Network v. Wash. State Ins. Commissioner.

The “Armed Citizens’ Legal Defense Network” is a good example of how an insurance relationship can exist in unexpected places. ACLDN is a group of gun owners who agree to support each other if one of them faces legal charges after using a firearm in self defense. Members pay into ACLDN’s legal defense fund. Following what is euphemistically dubbed “a self-defense incident,” the fund pays the attorneys’ fees and other costs a member incurs as a result of defending against legal proceedings. So, basically, you pay ACLDN now, and ALCDN pays you later if you need a legal defense.

Is this insurance? ACLDN doesn’t think so. And it’s up front with its members about that. Its advertising tells prospective members explicitly that benefits “are not insurance.” And it doesn’t promise any specific payments. Rather, it promises only to review the facts of your case, decide whether you were really defending yourself, and make the decision whether to provide financial support for your legal defense.

Washington’s Office Insurance Commissioner saw things differently. It issued a fine and a Cease and Desist order against ACLDN for, basically, selling insurance without a license. The case made its way to the Court of Appeals, which sided with the Insurance Commissioner.

The court rejected ACLDN’s argument that it wasn’t selling insurance because it had no contractual obligation to pay its members anything. According to ACLDN, it retains the right not to pay for a particular member’s legal defense. And, if it declines to do so, the member has no legal recourse.

But, the court pointed out, ACLDN’s right not to fund a legal defense is specifically defined. ACLDN can only refuse to defend a member if it determines the member’s use of force was not legally justified. That’s an objective test. So the court had little difficulty concluding ACLDN had an enforceable contract with its members to fund their legal defenses so long as their use of force was justified.

The court also rejected ACLDN’s argument that whether a member’s use of force was lawful isn’t objectively determinable. It pointed out that insurance companies decide whether an insured acted in legitimate self defense all the time. Liability insurance, for example, can provide a defense if you are accused of causing someone’s death–but it would exclude coverage where you used lethal force without justification.

From there, it’s easy to see how the court ruled ACLDN’s contracts promise insurance. ACLDN pays specific costs like bail or attorneys’ fees. It does so when a specific thing happens: a member uses lethal force in self defense. It’s the same procedure as your car insurance or health insurance: you pay up front and the company pays you if the bad thing happens in the future.

Washington State Insurance News Roundup: Credit Scores, Surprise Medical Billing, and Vaccines

Washington State’s Office of the Insurance Commissioner (“OIC”) has had a busy March. The OIC, Washington State’s regulator responsible for overseeing insurance sold in Washington, issued several orders regarding discriminatory insurance pricing and the COVID pandemic.

First, the OIC banned insurers from using credit scores to price insurance. The insurance commissioner found the ban necessary to prevent discriminatory pricing in auto, renters, and homeowners insurance. Using credit scores to price insurance has been criticized as discriminatory because the practice results in low-income policyholders and people of color paying more for insurance. Auto insurance companies, for example, charge good drivers with low credit scores nearly 80% more for state-mandated auto coverage. This practice is anticipated to become even more egregious as COVID emergency protections expire this year, causing people who experienced financial hardship due to the pandemic to pay more for insurance merely because their credit scores have dropped. The insurance commissioner acted after legislation banning credit scores in insurance pricing failed to advance through the Washington State legislature.

Second, OIC extended certain emergency orders regarding COVID. These orders require health insurance companies to waive cost-sharing and protect consumers from surprise bills for COVID testing. The orders also require insurers to allow out-of-network providers to treat or test for COVID if the insurer lacks sufficient in-network providers. These orders were originally entered last year and are now extended to April 18, 2021. OIC also extended the requirement that insurers cover telehealth services.

Third, OIC responded to COVID vaccine misinformation. False reports have percolated that getting the COVID vaccine can void life insurance coverage or affect premiums or benefits. The OIC clarified that COVID vaccination will not harm your insurance eligibility.

Lastly, OIC gave an update on the effect of the American Rescue Plan Act on health insurance premiums for policies purchased on the Exchange (a/k/a “Obamacare” policies). OIC explained that the revisions in the new law reduces the percentage of income that people must pay for health coverage on an Exchange policy. The new law also increases subsidies for people receiving unemployment benefits and covers COBRA premiums for people who lost their job but want to keep their employer-sponsored coverage.

COVID-19 Insurance Updates

Here are some updates in the fast-evolving COVID-19 insurance world:

  • Washington State’s insurance commissioner extended the deadline for insurers to file certain kinds of lawsuits over property insurance coverage. Most homeowners’ insurance policies require any lawsuit against the insurer be filed within a certain length of time from the loss (often one year). Missing the deadline can deprive the policyholder of their right to sue the insurer for any misconduct. The insurance commissioner’s order requires insurers to extend this deadline for certain claims where the policyholder is in the process of completing repairs. Since the residential construction industry has been shut down due to emergency “stay at home” orders, many folks have been unable to complete repairs on time. Extending this deadline will help these policyholders protect their rights.
  • Washington’s insurance commissioner also warns against Medicare coronavirus scams. Scammers are targeting Medicare enrollees with bogus vaccines for the virus.
  • Many states, mostly in the northeast for now, are considering legislation requiring insurers to provide coverage for businesses losing money because they cannot operate during the pandemic. For example, Pennsylvania’s proposed legislation requires commercial insurers providing so-called “business interruption coverage” to cover COVID-19 related losses. Many insurance policies are believed to exclude such losses unless such legislation becomes effective.

Stay healthy!

Coronavirus Insurance Issues

The COVID-19 pandemic is causing many types of insurance questions. Below is an FAQ on some insurance issues people may be dealing with during the pandemic. As always, it’s important to keep in mind that the specific facts and insurance policy language will vary from case to case. An FAQ can’t take the place of legal advice from consulting with an attorney directly. But hopefully this will help point you in the right direction.

Health Insurance

Typical health insurance covers COVID-19 treatment just the same as any other illness. Washington’s Affordable Care Act (a/k/a Obamacare) exchange platform is allowing a special open enrollment period for qualified uninsured individuals to buy insurance on the state Exchange through April 8, 2020. This is an exception to the normal rule that you can only buy Exchange coverage during special periods.

There are also special rules for COVID-19 testing. The federal government designated COVID-19 testing as an essential health benefit, meaning that Medicaid and Medicare plans should cover testing. Washington’s Office of the Insurance Commissioner has ordered health insurers to cover COVID-19 testing without deductibles or cost-sharing. Also, insurers have to allow patients to refill necessary prescriptions regardless of the normal waiting periods.

Disability Insurance

Employees unable to work due to COVID-19 might have recourse under disability insurance policies.  Disability coverage should provide benefits for folks who can’t work because they are sick. But, as always, the fine print matters. Many policies have waiting periods or other detailed rules for paying benefits. The specific rules will also depend on how you obtained coverage. Most folks get disability insurance from their employer, and will have to navigate the special claims procedures under ERISA. For folks who bought their policies themselves, claims will be governed by Washington State law which is generally more policyholder-friendly.

Business Loss Insurance

Businesses who close or lose revenue because of the pandemic or the state-ordered lockdown might have claims for business interruption coverage. This coverage is often provided by standard commercial insurance policies. These claims depend heavily on the specific policy language and facts. For example, some policies require actual physical damage to property before paying business interruption benefits. Other policies might require the business be closed by the authorities. It is also important to be able to document the specific losses incurred under business interruption coverage.

Know Your Rights

Anyone who thinks they have insurance coverage related to COVID-19 should be on top of their rights. In disasters like this pandemic, insurers often cut corners or underpay claims. Washington State insurance policyholders have important rights, including the right to a full, fair, and prompt investigation of their claim at the insurer’s expense. Insurers also have a duty to fully disclose all the potential coverage that you might have.

Finally, here are some resources for non-insurance issues relating to the pandemic: