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Washington: UM/UIM Coverage for Intentional Acts Bill Amended to Address Potential Fraud

Rep. Mark Ericks sponsored legislation intended to expand UM/UIM insurance coverage following a highly publicized insurance claim earlier this session. HB 2415 is supported by Insurance Commissioner Mike Kreidler. The bill was unanimously approved by the House Financial Institutions & Insurance Committee last week before being sent on to the House Rules Committee. HB 2415 has an identical companion bill in the Senate.

In essence, HB 2415, commonly known as the "Ethel Bill" requires insurance carriers to provide UM/UIM coverage to "innocent" victims of motor vehicle related incidents regardless of whether the accident was caused by the "intentional act" of an at-fault uninsured or underinsured driver. The key provision of the proposed legislation relates to the definition of an "accident" in the standard UM/UIM insurance policy. HB 2415 defines an "accident" as being an occurrence that is unexpected and unintended from the standpoint of the covered person.

NAMIC, through its state advocacy partner, the Washington Insurers, and members of the insurance industry expressed concerns to the legislature that the original draft of the legislation did not adequately protect against a claimant using the expanded coverage afforded to "intentional acts" as a mechanism to collude with an uninsured/underinsured driver, who would intentionally cause a collision, in order to collect UM/UIM insurance proceeds. The bill was recently amended to add a requirement that the UM/UIM claimant file a police report and cooperate in the investigation of the intentional act incident.

NAMIC will work with the state legislature and the Office of the Insurance Commissioner to draft a bill that expands UM/UIM coverage to include "intentional acts" such as that which happened to Ethel Adams, but does not unintentionally create a new "window of opportunity" for the perpetration of insurance fraud. According to the Coalition Against Insurance Fraud, fraudulent claims cost the insurance industry and ultimately consumers $80 billion annually. Thus, NAMIC considers insurance fraud prevention an important public policy objective and will actively promote legislation that protects against misuse and abuse of expanded insurance coverages so that insurance fraud does not adversely impact affordability and availability of insurance coverage for the consumer.

Direct questions to NAMIC State Affairs Manager Christian Rataj.