Our law firm was not involved in this case.
In a recent opinion the Washington Court of Appeals rejected the argument that an insured should be reimbursed for its deductible when the insurance company collects from the at fault party.[1] The insured suffered a total loss of her vehicle. She had a $500 deductible.
Her carrier, Farmers, submitted a claim against the other driver’s insurance carrier, State Farm, via inter-company arbitration seeking recovery of its payment and the $500 deductible. The arbitrator determined that each driver was 50 percent at fault for the accident and awarded one-half of Farmers’ request for itself and one-half of the deductible. State Farm then paid $7,556 to Farmers and $250 to Farmers’ insured. Farmers’ insured took no action related to recovering either the property damage or her deductible from the other party or its insurer.
Farmers’ insured then sued Farmers for the remaining $250 of her deductible, arguing that the made whole doctrine applied.
The general rule is that, while an insurer is entitled to be reimbursed to the extent that its insured recovers payment for the same loss from a tort-feasor responsible for the damage, it can recover only the excess which the insured has received from the wrongdoer, remaining after the insured is fully compensated for his loss.[2]
In the case at bar the court pointed out that the made whole doctrine has only been applied when the insured brings claim against the at-fault party, but not when the insurance carrier does so. Also, in this case Farmers did not receive any of the deductible, so there was no windfall to Farmers.
An insurance regulation that went into affect after the operative events in this case now requires insurance carriers to seek reimbursement of the deductible and reimburse the insured.[3]
[1] Averill v. Farmers Insurance Company, 62767-8-I(March 15, 2010).
[2] Thiringer v. American Motors Insurance Co., 91 Wn.2d 215, 219, 588 P.2d 191 (1978).
[3] WAC 284-30-393.