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Livin’ on a Prayer (for Noneconomic Damages in a Coverage Dispute)

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Tommy, Bon Jovi fans know, is in trouble. From the opening lines of the song, “Livin’ on a Prayer,” we learn that things are so bad that Tommy’s got his six-string in hock.

The song implies that Tommy is in straits because the union’s been on strike. But it’s a little-known fact that Tommy is also down on his luck because he was injured in a car crash, so he couldn’t play the guitar for months and lost a bunch of gigs. In response, the insurance company stonewalled and ultimately unreasonably denied coverage, making things tough, so tough.

The song reports that Tommy’s temporary inability to play the guitar leaves him “holding in what he used to make it talk.” We’re not actually sure what this means, but we guess that it’s an allusion to Tommy’s inability to talk about the frustration, humiliation, and emotional distress he’s going through. Reinforcing this conclusion is the response of his partner Gina, who dreams of running away and cries in the night.

The song leaves us hanging, not knowing how things end for poor Tommy and Gina. So let’s imagine. Believing that “you live for the fight when that’s all that you've got,” Tommy and Gina hire good insurance coverage counsel, who tells them, “we’ll give it a shot,” and sues the insurance company. The Court holds that the insurance company unreasonably denied coverage and, answering their prayer, orders the insurer to pay all of Tommy’s covered financial losses.

But what about the emotional hell they went through due to the coverage denial? Can Tommy and Gina get any justice for this? Or will the Court instead limit them to their economic losses, leaving Tommy and Gina only halfway there on their journey to meaningful relief?

Fortunately, because Tommy and Gina live in Washington State, they just might.

Washington, frequent readers of this blog know, has a statute—the Insurance Fair Conduct Act, or “IFCA”—that authorizes an award of treble “actual damages” to policyholders whose coverage claims are unreasonably denied. And in its April 2022 decision in Beasley v. GEICO General Insurance Co., the Washington Court of Appeals held that “actual damages” include “noneconomic damages.” These include “subjective, nonmonetary losses,” such as “pain, suffering, inconvenience, mental anguish . . . emotional distress, loss of society and companionship, loss of consortium, [and] injury to reputation and humiliation.”

This means Tommy can recover the noneconomic losses he suffered due to the unreasonable denial of his claim, and he can potentially recover treble the amount of these losses. Thanks to Beasley, all may finally turn out right for Tommy and Gina.

But Beasley sounds one word of caution. In cases involving unreasonable coverage denials, claims for common-law bad faith and IFCA violations go hand in hand. But bad faith misconduct encompasses more than the unreasonable coverage denials that give rise to claims under IFCA. That means, as Beasley is quick to point out, the damages available for each claim might differ, and if that’s the case, trial courts must take care not to treble any bad faith damages that aren’t also recoverable under IFCA.

Beasley represents a significant expansion of policyholder rights in Washington, both for insured businesses as well as individuals like Tommy. If you’ve quite literally suffered from an unreasonable claim denial, do what Tommy and Gina did, and ask experienced coverage counsel about Beasley’s impact on your coverage claim.

Note: One of the co-authors wants to be very clear that he is not a Bon Jovi fan. The other co-author, who is one, will just let the matter drop, because life is too short.