Truck Ins. Exchange v. VanPort Homes, Inc.
58 P.3d 276 | Washington Supreme Court | 2002
What This Case Means for Subcontractors
VanPort Homes, a construction company, had a dispute with its insurance company, Truck Insurance Exchange, over coverage for construction defect claims. The insurer refused to defend VanPort in bad faith, and the Washington Supreme Court ruled that this refusal estopped the insurer from denying coverage altogether. The court also said that settlements approved by a court are presumed reasonable unless the insurer can prove fraud or collusion occurred. This case protects construction companies from insurers who wrongfully refuse to defend them.
Key Takeaways
- •If your insurer refuses to defend you in bad faith, they lose the right to deny coverage later—document all communications showing bad faith refusal
- •Court-approved settlements with claimants are automatically considered reasonable; your insurer must prove fraud or collusion to challenge them
- •Don't let an insurer's refusal to defend stop you from settling claims—proceed with court approval and the insurer will likely have to pay
An insurer that refuses to defend in bad faith is estopped from denying coverage.
Frequently Asked Question
What happens if my insurance company refuses to defend me in a construction defect lawsuit?
If the refusal is in bad faith, the insurer loses the right to deny coverage later. You can proceed with settling the claim with court approval, and the insurer will likely be required to pay. Document all communications showing the insurer's bad faith refusal to strengthen your position.
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