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.
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